Bull of the Day: Cracker Barrel (CBRL)

Sometimes the best stocks aren’t the ones with the prettiest numbers. They’re the ones where the numbers are getting less ugly faster than Wall Street expected. In a market where tech stocks are breaking records with their earnings reports and still going down, sometimes the best move is a stock in an old boring industry that has a really low bar. That’s the case with today’s Bull of the Day, which has been forcing analysts to rethink their bearish demise and start ticking up those earnings estimates.

Today’s Bull of the Day is Zacks Rank #1 (Strong Buy) Cracker Barrel Old Country Store (CBRL).

Yes, that Cracker Barrel. Rocking chairs. Chicken n’ dumplins. That peg game where you inevitably leave three pegs and question your intelligence. But underneath all that country-store nostalgia, something interesting has been happening. Recent earnings expectations have been moving in the right direction.

Cracker Barrel enters its fiscal fourth-quarter report onn Wednesday, September 23 with the Zacks Consensus calling for earnings of roughly $0.20 per share on revenue of about $831 million. Neither number jumps off the page. Revenue is expected to decline about 4% year over year and restaurant comparable-store sales are projected to fall roughly 3.4%.

Cracker Barrel Old Country Store, Inc. Price and Consensus

Cracker Barrel Old Country Store, Inc. price-consensus-chart | Cracker Barrel Old Country Store, Inc. Quote

Wall Street already knows the business has problems. What matters now is whether those problems are getting better or worse. And lately, the earnings estimates have been getting better.

Current year Zacks Consensus Estimate is up from a loss of 97 cents to a profit of 7 cents over the last 90 days. Next year’s number is up from 67 cents to $1.28. The reason being, four analysts have upped the ante for both the current year and next year. That is exactly the kind of earnings momentum I want to see.

Last quarter gave investors a taste of what could happen if management starts getting some traction. Fiscal Q3 revenue came in at $797.4 million, with restaurant comps down 2.6%. Adjusted EBITDA was $40.3 million. More importantly, management raised its full-year revenue outlook to $3.27 to $3.30 billion and dramatically increased adjusted EBITDA guidance to $120 to $125 million from $85 to $100 million previously. That is exactly what sparked the latest round of positive estimates from analysts and real reason why this stock swung to a Zacks Rank #1 (Strong Buy).

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This article originally published on Zacks Investment Research (zacks.com).

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