Cracker Barrel Stock Breaks Out To Buy Zone On Strong Earnings

Cracker Barrel (CBRL) beat fiscal first-quarter earnings views Tuesday on a surprise gain in same-store sales, lifting Cracker Barrel stock into a buy zone.

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Cracker Barrel Earnings

Estimates: Wall Street expected Cracker Barrel earnings per share to dip 0.5% to $1.91. Analysts saw revenue moving 1% higher to $717 million. Consensus Metrix forecast a 0.8% same-store sales decline, with restaurant comps down 0.8% and retail comps up 0.7%.

Results: Cracker Barrel earnings grew 2% to $1.96 a share on revenue of $733.5 million. Same-store sales rose 1.4%, with restaurant comps up 1.4% and retail comps up 4.3%. A 3% increase in average check offset a 1.6% decrease in comparable store restaurant traffic.

Outlook: The company still sees full-year EPS of $8.95-$9.10 on revenue of $3.04 billion and restaurant comps coming in flat to up 1%. But management now sees operating income margin of 9%-9.3% vs. a prior view for 9.3%.

Analysts see full-year EPS of $9.96 on revenue of $3.025 billion.

“Our teams made progress on improving traffic through a heightened focus on the guest experience, our menu, our everyday value, and the continued expansion of our off-premise business,” said CEO Sandra Cochran. “We delivered positive comparable store sales in both restaurant and retail, and we improved upon our fourth quarter sales trend.”

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Cracker Barrel Stock, Restaurant Stocks

Shares of Cracker Barrel climbed 3.7% to 181.50 on the stock market today, clearing a 179.22 buy point from a long cup base.

Denny’s (DENN) edged up 0.75% as it’s consolidating. Dine Brands Global (DIN), which operates Applebee’s and IHOP restaurants, rose 1.9%. Dine Brands stock was trying to reclaim a 95.10 buy point of a cup base.

Restaurant stocks overall have held up reasonably well in the market correction, with McDonald’s (MCD) and Starbucks (SBUX) trading near record highs and Chipotle Mexican Grill setting up near a buy point.

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Cracker Barrel Discount Wars

Cracker Barrel, which operates restaurants with adjoining retail stores, has struggled with slowing traffic in its restaurants. A quick fix appeared elusive, SunTrust analyst Jake Bartlett said in a September research note.

When Cracker Barrel reported earnings in September, management said it believed higher gas prices cut into customers’ disposable income. It also said marketing efforts and new menu items weren’t resonating. The company, known for its biscuits and other Southern-fried assortments, also blamed “a lack of emphasis on our value preposition and on delivering craveable food offerings.”

Other restaurants have been been drawn into an battle to offer discount deals to consumers. Those deals broaden the options for people dining out but crimp sales and profit margins for the chains serving them.

Cracker Barrel said it had been “rigorously analyzing” its difficulties with drawing more diners.

The chain is bringing bone-in fried chicken to more of its restaurants in an effort to fill gaps in its “craveability” challenges. Management said that its Daily Delights menu to sell cheaper meals.

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The post Cracker Barrel Stock Breaks Out To Buy Zone On Strong Earnings appeared first on Investor's Business Daily.

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