CBRL - Embedded Expectations Analysis - 2021 10 07
Cracker Barrel Old Country Store, Inc. (CBRL:USA) currently trades near corporate averages relative to UAFRS-based (Uniform) earnings, with a 21.5x Uniform P/E. At these levels, markets are pricing in expectations for a modest profitability recovery. However, given management's confidence about their breakfast menu, off-premise sales growth, and staffing levels, market expectations are overly pessimistic, suggesting equity outperformance remains warranted.Specifically, management is confident their focus will shift to the breakfast menu in 2022, that they can retain at least 60% of the growth in off-premise sales they experienced during the pandemic due to a strong everyday value proposition, and that they have made a lot of progress on getting restaurants staffed. In addition, they are confident they have had a very consistent focus over the years on improving profitability and productivity.
Given management's confidence about their breakfast menu, off-premise sales growth, and staffing levels, market expectations are overly pessimistic, suggesting equity 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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