Markets

What to Expect from Cracker Barrel's (CBRL) Q2 Earnings?

Restaurant chain Cracker Barrel Old Country Store, Inc.CBRL is slated to release second-quarter fiscal 2016 results on Feb 21, before the market opens.

Last quarter, Cracker Barrel posted a 9.24% positive earnings surprise. In fact, the company's earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 2.96%.

Let's see how things are shaping up for this announcement.

Cracker Barrel Old Country Store, Inc. Price and EPS Surprise

Cracker Barrel Old Country Store, Inc. Price and EPS Surprise | Cracker Barrel Old Country Store, Inc. Quote

Factors to Consider

Cracker Barrel's distinctiveness in the retail-restaurant sector lies in the fact that apart from serving food, its restaurant establishments have old-country feel along with unique gift shops.

The fiscal first quarter marked the company's 10th consecutive quarter of positive sales growth and the 20th consecutive quarter of outperforming the casual dining industry. We expect the company's focus on delivering a differentiated brand experience, its excellent operations execution and its broadened marketing efforts to continue the trend of this outperformance in the fiscal second quarter as well.

Meanwhile, the company expects earnings per share in the fiscal second quarter to be in the range of $2.05 and $2.15. This reflects an increase of roughly 7-13% over the last year. Management also expects that the company's cost saving initiatives, commodity costs favorability and the growth of its off-premise business, should further drive the quarter's results.

Nevertheless, management notes that the company's retail business is presently under pressure. The fiscal first quarter proved to be a very challenging period both within Cracker Barrel and the retail industry, as a whole. Although the company has new product assortments lined up to drive guest interest, management believes that despite improvement over fiscal first quarter performance, the fiscal second quarter retail sales are likely to witness a decline.

Moreover, a soft consumer spending environment in the U.S. restaurant space might keep traffic, and thereby comps under pressure in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Cracker Barrel is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP:Earnings ESP for Cracker Barrel is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $2.13 per share. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Zacks Rank: Cracker Barrel currently carries a Zacks Rank #2. However, the company's 0.00% ESP makes surprise prediction difficult. You can see the complete list of today's Zacks #1 Rank stocks here .

Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies in the broader Retail-Wholesale sector to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Papa John's International, Inc. PZZA has an Earnings ESP of +4.55% and a Zacks Rank #2.

SpartanNash Company SPTN has an Earnings ESP of +2.04% and a Zacks Rank #2..

The Priceline Group, Inc. PCLN has an Earnings ESP of +0.46% and a Zacks Rank #3.

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The Priceline Group Inc. (PCLN): Free Stock Analysis Report

Cracker Barrel Old Country Store, Inc. (CBRL): Free Stock Analysis Report

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SpartanNash Company (SPTN): Free Stock Analysis Report

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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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