On Friday, Loop Capital adjusted its outlook on Cracker Barrel (NASDAQ:CBRL), reducing the price target to $45.00 from the previous $50.00, while keeping a Hold rating on the stock. This change follows Cracker Barrel's fiscal fourth-quarter earnings report, which featured an earnings per share (EPS) that fell short of expectations.
The restaurant chain reported an adjusted EPS of $0.98 for the quarter ending in July 2024, which was below both Loop Capital's estimate of $1.12 and the consensus estimate of $1.10.
Cracker Barrel's comparable restaurant sales saw a slight increase of 0.4% in the fourth quarter of 2024. This included a 4.2% rise in menu pricing, counterbalanced by a 3.8% decline in customer traffic. The reported sales figures were somewhat under Loop Capital's forecast of 1.0% growth but aligned with the general market consensus.
The reduction in the price target to $45 is based on a multiple of 6.5 times the firm's revised fiscal year 2025 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA) estimate. Despite the EPS miss and modest performance in restaurant sales, Loop Capital is maintaining its neutral stance with a Hold rating.
In other recent news, Cracker Barrel Old Country Store, Inc. reported its fiscal 2024 fourth-quarter earnings, revealing a total revenue of $894.4 million, marking a 6.9% increase from the previous year. However, the company noted a decrease in adjusted EBITDA to $57.4 million. Truist Securities has adjusted its price target for Cracker Barrel, increasing it to $44.00, up from the previous target of $42.00, maintaining its Hold rating on the stock. This adjustment comes in the wake of Cracker Barrel's recent performance and future plans.
The company also announced plans for fiscal 2025, which include 25 to 30 store remodels and the opening of new Cracker Barrel and Maple Street locations. Cracker Barrel projects a revenue of $3.4 billion to $3.5 billion for the upcoming fiscal year. Additionally, the company's Rewards loyalty program has reached 6 million members, contributing to increased engagement and sales.
While these are notable developments, Truist Securities anticipates that customer traffic to Cracker Barrel may continue to face challenges. The firm noted that the timeline for improvement is uncertain, suggesting potential ongoing pressure on the restaurant's performance.
InvestingPro Insights
Cracker Barrel's recent fiscal fourth-quarter earnings report has prompted analysts to reassess their outlook on the company. In light of this, it's beneficial to consider additional metrics and insights. According to InvestingPro data, Cracker Barrel has a market capitalization of $912.77 million and a price-to-earnings (P/E) ratio of 22.71, which adjusts to 11.03 when looking at the last twelve months as of Q3 2024. This suggests that while the stock may appear expensive based on current earnings, it is more reasonably valued when considering the earnings over the past year.
InvestingPro Tips highlight that Cracker Barrel has a high shareholder yield, which could be attractive to investors seeking returns through dividends and buybacks. Additionally, it's noteworthy that the company has maintained dividend payments for 43 consecutive years, underscoring its commitment to returning value to shareholders. However, potential investors should be aware that Cracker Barrel's short-term obligations exceed its liquid assets, which could present liquidity challenges. Furthermore, while the stock has taken a significant hit over the last six months, with a 37.56% decline in price total return, analysts predict the company will remain profitable this year, which is supported by the fact that it has been profitable over the last twelve months.
For those interested in a deeper dive into Cracker Barrel's performance and potential investment opportunities, InvestingPro offers additional tips, with a total of 6 tips available at: https://www.investing.com/pro/CBRL. These insights could provide valuable context for investors considering Cracker Barrel's stock, especially in the aftermath of the recent earnings report and revised analyst expectations.
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