Market Overview

Cracker Barrel Shares Fall After Earnings; Here's What A Couple Of Analysts Think Now


Shares of Cracker Barrel Old Country Store, Inc. (NASDAQ: CBRL) fell as much as 3 percent Wednesday after SunTrust downgraded the stock to Neutral from Buy on lower same-store sales forecast and declining market share gains.

Cracker Barrel lowered its implied fiscal 2016 same-store sales guidance to 1.5-3.5 percent from roughly 2.5-4.5 percent. While positive same-store sales and traffic in February are encouraging, this was due in part to weather, and management is concerned the competitive environment will worsen.

"We are concerned that casual dining competitors are gaining on CBRL. In F2Q16, CBRL's SSS outperformance to casual dining peers, declined to +20bps, the lowest level since F2Q12 and below +210bps in F1Q16 and the +300bps 3yr avg," analyst Jake Bartlett said in a client note.

The analyst, who maintained his target price of $151, said lower food inflation and taxes now reflected in estimates and cut his 2016 EPS view to $7.55 from $7.66. The company raised its outlook for 2016 adjusted EPS to a range of $7.40-$7.50. The company expects to report comparable-store sales in the range of 1.5 percent to 2.5 percent, and sees total revenue between $2.90 billion and $2.95 billion. Analysts' consensus estimate is at $7.48 a share on revenue of $2.92 billion.

"We expect CBRL's SSS to outperform peers' and cost cutting initiatives to drive high-single-digit LT EPS growth, but believe this is now largely priced in. We maintain our target CY17 P/E multiple of 17.0x," Bartlett added.

Meanwhile, Maxim analyst Stephen Anderson maintained his Buy rating and $155 price target. He said the March quarter appears to be off to a solid start after a quarter marked by tough comparisons and harsh winter weather.

"We believe that CBRL's comps are poised to return to a 2%-3% pace in FY3Q16 (March), and expect this pace to be sustained in the next few quarters. We expect to see an EPS lift from a lower tax rate, but argue that lower commodity costs and the potential for accelerated cost savings in other areas will have a more profound effect on earnings growth in the next 12-24 months," Anderson said in a client note.

Latest Ratings for CBRL

Sep 2020Truist SecuritiesMaintainsBuy
Sep 2020Wells FargoMaintainsEqual-Weight
Sep 2020MKM PartnersMaintainsNeutral

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