Foolish Forecast: Cracker Barrel Goes Country

CBRL Group (Nasdaq: CBRL), owner of the off-highway Cracker Barrel restaurants and adjoining Old Country Stores, is looking to return to its roots, offering patrons tastier home cooking and a more enjoyable dining experience. Time will tell whether the moves pay off for investors, but we'll know more when the company releases fourth-quarter and year-end results tomorrow morning.

What analysts say:

• Buy, sell, or waffle? Thirteen analysts follow CBRL Group; two are bullish on the stock, 10 are on the fence with hold ratings, and one recommends you sell the shares. The Motley Fool CAPS community gives the company a two-star rating (out of five).
• Revenue. Analysts are projecting $634.2 million in fourth-quarter sales, or about 5.5% below last year's amount. 
• Earnings. Analysts expect quarterly earnings of $1.02, or a penny below the $1.03 reported last year.

What management says:
Back when the company announced third-quarter results, it predicted fourth-quarter sales growth of 12% to 12.5% from continuing operations, as it opens five stores and plans for flat to slightly positive comps at existing stores. It fell short of offering earnings guidance, but projected operating margins of 8.5% to 9% and higher interest expense, because it recently redeemed convertible stock and repurchased a significant amount of shares.  

What management does:
Investors have a good indication of quarterly sales trends because CBRL has already announced monthly same-store sales. CBRL Group's motto is: "Half restaurant. Half store. All country." As such, it breaks out comps in both categories. Restaurant comps grew 3.1% for August, 1.6% in July, and 1.1% in June, while retail comps rose 0.1%, 1.5%, and 2.9%, respectively.

Fools will find out the bottom-line results tomorrow, but recent trends point to increased profitability in the past two quarters -- thanks to better cost controls -- and a refocus on the core Cracker Barrel business.    

Margins	1/06	4/06	7/06	10/06	1/07	4/07
Gross	30.7%	27.5%	31.5%	31.6%	31.4%	32.4%
Operating	7.7%	7.6%	7.5%	7.5%	7.3%	7.1%
Net	5.0%	5.1%	4.4%	4.1%	6.8%	6.3%

All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Last October, management decided to sell its Logan's Roadhouse restaurants and used the proceeds to buy back stock. In other words, it's now at the point where it can return to the basics of running its original stores and returning to steady sales and earnings gains.

The progress is slow, but so far, the company is making headway: Its recent comps release showed signs of improvement. But CBRL still has work to do, especially since cash flows hit negative territory last quarter. For the time being, Fools would be better served by looking into Chipotle Mexican Grill (NYSE: CMG) (NYSE: CMG-B), Buffalo Wild Wings (Nasdaq: BWLD), and Sonic (Nasdaq: SONC) for tastier growth prospects.      

For more related Foolishness:

• August sales look to be creeping up.
• Third-quarter results fell to the bottom of the cracker barrel.
• Back in February, the company rocked slowly.