Cracker Barrel Upped to Strong Buy on Robust Q2 Results - Analyst Blog

On Feb 28, Zacks Investment Research upgraded Cracker Barrel Old Country Store, Inc.CBRL to a Zacks Rank #1 (Strong Buy) following robust fiscal second-quarter 2015 results, which was reported on Feb 24.

Why the Upgrade?

In the second quarter, Cracker Barrel beat the Zacks Consensus Estimate for both earnings and revenues which also increased year over year. Adjusted earnings of $1.93 beat the Zacks Consensus Estimate by 19.1% and increased 23.7% year over year. Further revenues also beat the Consensus mark by 2.5% and improved 8.2% year over year.

Additionally, the company's comps increased 7.9%, aided by 4.7% improvement in traffic. In fact, Cracker Barrel has consistently outperformed the Knapp-Track casual dining index - a monthly sales and guest count tracking service for restaurant operators - over the past 12 quarters. This reflects the fact that customers are flocking to the restaurants, and the company's promotional efforts are yielding positive results. Additionally, the company's comparable retail sales increased 3.2% year over year.

Increase in traffic at the company's stores also resulted in 100 basis points increase in store operating income to 9.4%.

Such robust results, prompted the company to increase its earnings guidance for 2015. The company now expects adjusted earnings per share to range between $6.40 and $6.50, up from the $5.95 to $6.10 range. For fiscal 2015, the company expects total revenue within $2.80 to $2.85 billion, up from the prior guidance of $2.8 billion.

Comps for 2015 are expected in the range of 3.5% to 4.5%, up from 2.5% to 3.5%.

This bullish outlook regarding fiscal 2015 triggered an uptrend in the Zacks Consensus Estimate which rose 6.2% to $6.53 for fiscal 2015 earnings.

Hence, such robust results coupled with a strong outlook for 2015 led to the rank upgrade.

Other Stocks to Consider

Apart from Cracker Barrel, other stocks worth considering in the restaurant industry include Dave & Buster's Entertainment, Inc. PLAY , Ignite Restaurant Group, Inc. IRG and Brinker International, Inc. EAT . While Dave & Buster's and Ignite Restaurant sport a Zacks Rank #1, Brinker has a Zacks Rank #2 (Buy).

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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 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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