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Cracker Barrel Stock Keeps Falling. Is It Time to Bail?

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CBRL data by YCharts .

What it doesn't explain, though, is the continued fallout after the end-of-year earnings announcement. Despite rounding out a period of strong growth, investors were disappointed with the outlook for the 2017 fiscal year. Traffic growth started to slow late in the summer and that trend is expected to persist in the coming 12 months.

A bright spot in the outlook is the expectation that seven or eight new Cracker Barrels will be opened. Despite this development, though, management sees revenue only increasing to between $2.95 billion and $3 billion, an increase of 1.4% to 3.1%.

Earnings per share are also expected grow to $7.95 to $8.10 during the 2017 fiscal year. That would be a 0.5% to 2.5% increase over 2016. While profits on the rise are always a good thing, a best-case outlook of 2.5% growth pales when compared to the 15% growth rate investors just enjoyed. With that as a backdrop headed into the fall months, Cracker Barrel's stock has declined roughly 20% from July highs.

What should investors do?

These developments don't mean current shareholders need to panic. The last 18 months have been a roller coaster, but this is to be expected. Investors are filtering through new information indicating Cracker Barrel is exiting a high-growth phase to one where cost savings and increasing cash payout is the new norm.

If you're looking for a high-octane restaurant that is aggressively expanding its service, Cracker Barrel may not be your game any longer. For those looking for long-term stability and a company that has shown its commitment to returning excess cash flow to investors, there's no need to jump ship at this point.

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Nicholas Rossolillo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

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


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

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