Friday - Truist Securities updated its outlook on Cracker Barrel (NASDAQ:CBRL) shares, raising the restaurant chain's price target to $48 from $44 while maintaining a Hold rating on the stock. The adjustment follows Cracker Barrel's preliminary financial results for the first quarter of fiscal year 2025, which showed sales, adjusted EBITDA, and adjusted EPS that surpassed expectations. The company also reiterated its guidance for the coming year.
The analyst from Truist Securities noted the positive momentum in Cracker Barrel's same-store sales (SSS) during the first quarter and its commendable performance relative to its industry peers. Despite the encouraging signs, the analyst also pointed out that sales trends continue to be unpredictable. The recent data from the Truist Card indicated a slowdown in sales, suggesting that the market remains challenging.
Cracker Barrel's ongoing turnaround efforts were highlighted, with the expectation that aggressive menu pricing strategies are currently bolstering the company's profit margins. The analyst anticipates a further margin boost in the second quarter of fiscal year 2025 from the pricing of the Heat n' Serve options and potential relief from easing commodity prices.
The financial performance in the first quarter is expected to strengthen Cracker Barrel's position in its upcoming proxy battle. The decisive meeting for this contest is scheduled for November 21, 2024. The outcome of this battle is likely to have significant implications for the company's strategic direction and governance.
In other recent news, Cracker Barrel Old Country Store, Inc. reported better-than-expected Q1 results, with a same-store sales growth of 2.9% in its restaurant segment and a slightly better performance in its retail segment, leading to an adjusted EBITDA of $45.8 million. This led BofA Securities to adjust its price target on the company.
However, Cracker Barrel faced criticism from major shareholder Biglari Capital Corp., which called for significant changes, including a halt to new store openings and a focus on improving store-level economics. In response, Cracker Barrel's board urged shareholders to support its recommended slate of nominees and reject Biglari's proposals at the upcoming Annual Meeting of Shareholders.
The company's fiscal 2024 fourth-quarter earnings report revealed a total revenue of $894.4 million, a 6.9% increase from the previous year, yet the adjusted EBITDA decreased to $57.4 million. Both Truist Securities and Loop Capital maintained their Hold rating on Cracker Barrel's shares.
The company's fiscal 2025 plans include 25 to 30 store remodels and the opening of new Cracker Barrel and Maple Street locations, projecting a revenue of $3.4 billion to $3.5 billion for the upcoming fiscal year. These are the recent developments for the company.
InvestingPro Insights
Cracker Barrel's recent performance and future outlook can be further illuminated by data from InvestingPro. The company's market capitalization stands at $1.07 billion, with a P/E ratio of 26.1, reflecting investor expectations. Despite the challenges noted in the article, InvestingPro Tips highlight that Cracker Barrel has maintained dividend payments for 43 consecutive years, demonstrating a commitment to shareholder returns even in difficult times.
The company's revenue for the last twelve months as of Q4 2024 was $3.47 billion, with a modest growth of 0.81%. This aligns with the analyst's observation of unpredictable sales trends. However, the quarterly revenue growth of 6.89% in Q4 2024 suggests some positive momentum, which could support the company's turnaround efforts mentioned in the article.
InvestingPro Tips also indicate that analysts predict the company will be profitable this year, which could be crucial for Cracker Barrel's position in the upcoming proxy battle. For investors seeking a more comprehensive analysis, InvestingPro offers 7 additional tips that could provide deeper insights into Cracker Barrel's financial health and market position.
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