CBRL - Embedded Expectations Analysis - 2021 06 16
Cracker Barrel Old Country Store, Inc. (CBRL:USA) currently trades below corporate averages relative to UAFRS-based (Uniform) earnings, with a 13.3x Uniform P/E. At these levels, markets are pricing in expectations for a modest profitability recovery. That said, given management's confidence about their sales recovery, delivery channel, and product test expansion, market expectations are overly pessimistic, suggesting long-term outperformance remains warrantedSpecifically, management is confident EBITDA will continue to grow as sales recover, restaurant cost of goods sold benefitted from inflation-offsetting pricing increases, and they are extending their virtual brand chicken and biscuits test to 19 additional locations. They are also confident their third-party delivery channel has introduced them to new customers and that strengthening their balance sheet during the pandemic enabled them to deliver a quarterly dividend of $1 per share
Given management's confidence about their sales recovery, delivery channel, and product tests, market expectations are overly pessimistic, suggesting long-term outperformance remains warranted
Cracker Barrel Old Country Store is principally engaged in the operation and development of the Cracker Barrel Old Country Store? concept. The format of the company's stores consists of a trademarked rustic old country-store design providing a restaurant menu that features home-style country food and a variety of items such as rocking chairs, holiday and seasonal gifts, toys, apparel, cookware and foods. The company's restaurants serve breakfast, lunch and dinner daily. Lunch and dinner items include southern fried chicken, chicken and dumplings, chicken fried chicken, meatloaf, country fried steak, pork chops, fish, steak, roast beef, vegetable plates, sandwiches and a variety of salads.
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