Cracker Barrel Old Country Store, Inc. - Growth & Income

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Cracker Barrel Old Country Store, Inc. ( CBRL ) served up strong third quarter results on May 22, driven by a 3.1% increase in comparable restaurant sales and an expanding operating margin.

This led management to revise their earnings guidance higher for the remainder of the year, prompting analysts to raise their estimates for both 2012 and 2013. It is a Zacks #2 Rank (Buy) stock.

Cracker Barrel also recently announced a 40% increase in its quarterly dividend. It now yields a solid 2.8%.

Company Description

Cracker Barrel Old Country Store, Inc. was founded in 1969 and is headquartered in Lebanon, Tennessee. The company operates 615 restaurants and gift shops in 42 states. It has a market cap of $1.4 billion.

Third Quarter Results

Cracker Barrel served up strong results for the third quarter of its fiscal 2012 on May 22. Earnings per share came in at 86 cents, beating the Zacks Consensus Estimate of 74 cents. It was a stellar 48% increase over the same quarter in 2011.

Total revenue rose 5% to $608.5 million, driven by a solid 3.1% increase in comparable restaurant sales. The average check increased 2.5% thanks to menu price increases, while comparable restaurant traffic inched up by 0.6%.

Adjusted operating income surged 40% as the operating margin expanded 170 basis points to 6.7%.

Increased Guidance

Following strong third quarter results, management raised its earnings guidance for the remainder of the year. The company now expects 2012 EPS between $4.35 and $4.45. This was ahead of consensus at the time of the announcement and prompted a flurry of positive estimate revisions, sending the stock to a Zacks #2 Rank (Buy).

The Zacks Consensus Estimate for 2012 is now $4.43, within guidance, and representing 17% growth over 2011 EPS. The 2013 consensus is currently $4.60, corresponding with 4% EPS growth.

Increased Dividend

Back on April 26, Cracker Barrel announced a whopping 60% increase in its quarterly dividend to 40 cents per share. Since 2004, the company has increased its dividend at a compound annual rate of 18%.

It currently yields a solid 2.7%.

Reasonable Valuation

Shares of Cracker Barrel have rallied more than 16% since I last wrote about it on December 27.

But valuation still looks attractive with shares trading at 12.9x 12-month forward earnings, a discount to the industry median of 14.0x. Its price/sales ratio of 0.6 is in-line with its 10-year median.

The Bottom Line

With rising estimates, solid growth projections, a 2.8% yield and reasonable valuation, Cracker Barrel continues to offer a lot to like.

Read the December 27 article here.

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Todd Bunton is the Growth & Income Stock Strategist for Zacks Investment Research and Editor of the Income Plus Investor service .


 
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

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