On Thursday, BofA Securities maintained its Underperform rating on Cracker Barrel (NASDAQ:CBRL) with a steady price target of $40.00. The firm's analysis highlighted that Cracker Barrel's fourth-quarter restaurant comparable sales (comps) of 0.4% met the general consensus, matching the BofA estimate and Visible Alpha consensus of 0.2%. This performance was attributed to a balance between a 4.6 percentage point decline in traffic and mix, and a 4.2 percentage point increase from pricing adjustments.
The report observed that the trend of negative traffic for Cracker Barrel in the fourth quarter had been anticipated, citing industry data that showed a decline in casual dining traffic in recent months. According to Black Box data, the casual dining industry experienced a 1.4% decrease in traffic in May, worsening to a 3.9% drop in June, and a significant 7.2% decline in July.
Additionally, Cracker Barrel's retail same-store sales growth (SSSG) fell short of expectations, registering a 4.2% decrease. This result did not meet the anticipated figures, with BofA and Visible Alpha consensus predicting a less severe downturn of -2.0% and -1.6%, respectively. The underperformance in retail sales reflects a continued weakness in consumer discretionary spending on goods as opposed to services.
The maintained Underperform rating and price target suggest that BofA Securities sees limited upside potential for Cracker Barrel's stock at this time. The analysis provided by BofA Securities offers a snapshot of the company's recent performance in the context of broader industry trends, particularly highlighting the challenges faced in the retail segment amid shifting consumer spending patterns.
In other recent news, Cracker Barrel Old Country Store Inc. reported fourth-quarter earnings that did not meet analyst expectations. The restaurant chain posted adjusted earnings per share of $0.98, falling short of the consensus estimate of $1.14. Revenue was reported at $894.4 million, slightly below the projected $898.09 million. Despite this, comparable store restaurant sales saw an increase of 0.4% year over year, while retail sales decreased by 4.2%.
CEO Julie Masino highlighted the company's strategic transformation and the initial results of key initiatives such as operational excellence and the guest experience, optimized pricing, and their remodel program.
Looking ahead, for fiscal 2025, Cracker Barrel expects revenue between $3.4 billion and $3.5 billion, aligning with the consensus of $3.45 billion. As part of their growth strategy, the company plans to open 2 new Cracker Barrel stores and 3-4 new Maple Street Biscuit Company units.
InvestingPro Insights
Cracker Barrel (NASDAQ:CBRL) has shown resilience amid industry headwinds, with InvestingPro data indicating a market capitalization of $916.51 million and a P/E ratio of 15.42, reflecting investor sentiment towards its earnings potential. Notably, the company has a track record of maintaining dividend payments for 43 consecutive years, underscoring its commitment to returning value to shareholders. This is further highlighted by a significant return over the last week, with a 13.46% price total return, signaling investor confidence in the short term.
However, it's important to note that Cracker Barrel's short-term obligations exceed its liquid assets, which could pose challenges in immediate financial flexibility. Despite this concern, analysts predict the company will be profitable this year, as evidenced by a profitable last twelve months. For those considering an investment in Cracker Barrel, there are additional InvestingPro Tips available, providing deeper insights into the company's financial health and future prospects.
For a more comprehensive analysis and further InvestingPro Tips on Cracker Barrel, investors can visit https://www.investing.com/pro/CBRL. With additional tips available on the platform, investors can make more informed decisions backed by real-time data and expert analysis.
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