Cracker Barrel (CBRL) earnings release review for the 3rd quarter of their 2021 fiscal year
Category: Stock Market and Cracker Barrel Old Country Store (CBRL)
Date: 2 June 2021 Stock Price of Cracker Barrel: $157.99 Market Capital of Cracker Barrel: $3.75 billion We take a look at the 3rd quarter earnings release of their 2021 fiscal year of old style country stores and restaurants owner Cracker Barrel who owns and operates 664 stores across 45 states in the United States. The group reported revenue of $713.4 million and net income of $33.47 million
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I am pleased that our strong third quarter performance enabled us to restart our dividend program in keeping with our history of prudent capital management and allocation." - Cracker Barrel President and Chief Executive Officer Sandra B. Cochran
About Cracker Barrel Old Country Store (CBRL)
Cracker Barrel Old Country Store, Inc. (Nasdaq: CBRL), established in 1969 in Lebanon, Tenn., provides a friendly home-away-from-home in its old country stores and restaurants. Guests are cared for like family while relaxing and enjoying real home-style food and shopping that’s surprisingly unique, genuinely fun and reminiscent of America’s country heritage…all at a fair price. The restaurants serve up delicious, home-style country food such as meatloaf and homemade chicken n’ dumplins as well as our signature biscuits using an old family recipe. The authentic old country retail store is fun to shop and offers unique gifts and self-indulgences
Overview of Cracker Barrel's 3rd quarter 2021 earnings report
Third Quarter Fiscal 2021 Highlights
- The Company continued its sales recovery during the third quarter with both restaurant and retail comparable store sales improvements compared to the second quarter. Driven by the reopening of dining rooms and strategic sales initiatives, the Company further rebuilt its sales volumes.
- Versus the third quarter of fiscal 20191, comparable store restaurant sales decreased 8.6% and comparable store retail sales increased 10.8%.
- Comparable store off-premise sales grew 144.0% compared to the third quarter of 20191 and represented approximately 23% of restaurant sales.
- GAAP operating income in the third quarter was $52.5 million, or 7.4% of total revenue, and adjusted2 operating income was $55.7 million, or 7.8% of total revenue.
- GAAP net income was $33.5 million, or 4.7% of total revenue. EBITDA was $82.8 million, or 11.6% of total revenue; this represented an 84% sequential improvement compared to fiscal 2021 second quarter EBITDA of $45.0 million.
- GAAP earnings per diluted share were $1.41, and adjusted2 earnings per diluted share were $1.51.
- The Company's Board of Directors declared a quarterly dividend of $1.00 per share on the Company's common stock payable on August 6, 2021 to shareholders of record on July 16, 2021.
Cracker Barrel's management commentary on their 3rd quarter 2021 earnings and guidance
LEBANON, Tenn., May 25, 2021 /PRNewswire/ -- Cracker Barrel Old Country Store, Inc. ("Cracker Barrel" or the "Company") (Nasdaq: CBRL) today reported its financial results for the third quarter of fiscal 2021 ended April 30, 2021
Commenting on the third quarter results, Cracker Barrel President and Chief Executive Officer Sandra B. Cochran said, "The pace of our sales and margin recovery in the quarter exceeded expectations as we welcomed guests back into our dining rooms and our off-premise business remained strong. I'm pleased with the way our teams continue to deliver on our mission of Pleasing People as they care for guests and care for one another. As the ongoing recovery from the pandemic brings us closer to 2019 sales levels, I am confident our solid execution, unique brand, and the strategic initiatives implemented during the pandemic will support growth in long-term shareholder value."
Commenting on the third quarter results, Cracker Barrel President and Chief Executive Officer Sandra B. Cochran said, "The pace of our sales and margin recovery in the quarter exceeded expectations as we welcomed guests back into our dining rooms and our off-premise business remained strong. I'm pleased with the way our teams continue to deliver on our mission of Pleasing People as they care for guests and care for one another. As the ongoing recovery from the pandemic brings us closer to 2019 sales levels, I am confident our solid execution, unique brand, and the strategic initiatives implemented during the pandemic will support growth in long-term shareholder value."
Third Quarter Fiscal 2021 Results
Revenue
The Company reported total revenue of $713.4 million for the third quarter of fiscal 2021, representing an increase of 64.9% compared to the third quarter of the prior year, and a decrease of 3.5% compared to the third quarter of 2019. With the easing of dining room capacity restrictions, average weekly sales volumes increased significantly, driven by improvements in dine-in traffic, retained off-premise volumes, and strong retail performance. Cracker Barrel average per-store restaurant sales volumes grew from approximately $55,500 per fiscal week in fiscal January to approximately $70,000 per fiscal week in April.
Quarterly Dividend Declared
The Company's Board of Directors declared a quarterly dividend to common shareholders of $1.00 per share, payable on August 6, 2021 to shareholders of record on July 16, 2021.
"I am pleased that our strong third quarter performance enabled us to restart our dividend program in keeping with our history of prudent capital management and allocation. As it always does, our Board will evaluate our capital structure and allocation priorities as we move past the pandemic and into our next fiscal year," said Ms. Cochran.
Fiscal 2021 Fourth Quarter Outlook
The Company is providing the following selected components of its fiscal 2021 fourth quarter outlook:
Revenue
The Company reported total revenue of $713.4 million for the third quarter of fiscal 2021, representing an increase of 64.9% compared to the third quarter of the prior year, and a decrease of 3.5% compared to the third quarter of 2019. With the easing of dining room capacity restrictions, average weekly sales volumes increased significantly, driven by improvements in dine-in traffic, retained off-premise volumes, and strong retail performance. Cracker Barrel average per-store restaurant sales volumes grew from approximately $55,500 per fiscal week in fiscal January to approximately $70,000 per fiscal week in April.
Quarterly Dividend Declared
The Company's Board of Directors declared a quarterly dividend to common shareholders of $1.00 per share, payable on August 6, 2021 to shareholders of record on July 16, 2021.
"I am pleased that our strong third quarter performance enabled us to restart our dividend program in keeping with our history of prudent capital management and allocation. As it always does, our Board will evaluate our capital structure and allocation priorities as we move past the pandemic and into our next fiscal year," said Ms. Cochran.
Fiscal 2021 Fourth Quarter Outlook
The Company is providing the following selected components of its fiscal 2021 fourth quarter outlook:
- Total revenues of approximately flat to fiscal 2019 fourth quarter total revenues.
- Continued sequential improvement in operating income margin above fiscal 2021 third quarter operating income margin.
- Commodity inflation of approximately 5.0% and wage inflation on a constant mix basis of between 3.0% and 3.5%.
- Capital expenditures of approximately $25 million.
- Effective tax rate for the quarter in the range of 11% to 12%.
Cracker Barrel Old Country Store (NASDAQ:CBRL) stock price chart
The image below shows the stock price history of Cracker Barrel (CBRL) for the last 5 years. And its not been a good time for Cracker Barrel stockholders. Over the last 5 years the stock of Cracker Barrel suffered a loss of -6%. No investor would like to see those kind of returns.
The stock of Cracker Barrel Old Country Store is trading at a lot close to the midpoint between its 52 week low and 52 week high which to us is a clear indication that the short term sentiment and momentum of Cracker Barrel's stock is neutral at this point in time.
The stock of Cracker Barrel Old Country Store is trading at a lot close to the midpoint between its 52 week low and 52 week high which to us is a clear indication that the short term sentiment and momentum of Cracker Barrel's stock is neutral at this point in time.
Cracker Barrel (CBRL) stock vs Darden Restaurants (DRI) stock over the last 5 years
The image below shows the stock price performance of Cracker Barrel (CBRL) and Darden Restaurants (DRI) over the last 5 years. While both these stocks are active in the casual sit down dining space their stock price trends and returns are very different. The summary below shows the stock price returns of Cracker Barrel and Darden over the last 5 years:
The stock of Darden has easily outperformed that of Cracker Barrel over the last 5 years
- Darden (DRI): 111.5%
- Cracker Barrel (CBRL): -6%
The stock of Darden has easily outperformed that of Cracker Barrel over the last 5 years
Cracker Barrel (NASDAQ: CBRL) latest stock valuation
So based on the 3rd quarter 2021 earnings report of Cracker Barrel (NASDAQ: CBRL) and what do we value Cracker Barrel (CBRL) stock at? Based on the earnings reported and fiscal guidance provided our valuation model provides a target price (full value price) for Cracker Barrel at $148.90 a stock (up slightly from our 4th quarter 2020 earnings report valuation of Cracker Barrel).
We therefore believe that Cracker Barrel is overvalued at its current price of $157.99
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price) which in this case is $144.90. So a good entry point into Cracker Barrel would be around $134. We expect the stock of Cracker Barrel to pull back slightly coming weeks and months as it is overvalued at its current price,
We therefore believe that Cracker Barrel is overvalued at its current price of $157.99
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price) which in this case is $144.90. So a good entry point into Cracker Barrel would be around $134. We expect the stock of Cracker Barrel to pull back slightly coming weeks and months as it is overvalued at its current price,
Next earnings release of Cracker Barrel Old Country Store (CBRL)
It is expected that Cracker Barrel Old Country Store will release their 4th quarter 2021 earnings report in early September 20201