It will be a quiet week on the earnings front, but one name worth watching is Cracker Barrel (NASDAQ:CBRL). The unique concept that combines a restaurant specializing in southern comfort foods with a throwback country store will be posting its fiscal fourth-quarter results on Wednesday.
Analysts aren't holding out for much. They see flattish revenue growth, rising a mere 0.5% to $749.6 million. Earnings per share are expected to clock in at $2.19, just ahead of the $2.12 it rang up a year earlier. The stock is trading closer to its 52-week low than its 52-week high, seemingly making Cracker Barrel yet another casualty in what some are calling a "restaurant recession" in the casual-dining industry. It's tempting to call this a dog stock but hush, puppy.
Rocking back and forth
Cracker Barrel is coming off of a rough fiscal third quarter. Its profit of $1.95 a share may have beaten Wall Street's target of $1.85 a share, but revenue of $700.4 million fell well short of the $713.1 million that analysts were modeling.
Comps declined during the quarter, something that hadn't happened in nearly three years. The end of the 11-quarter streak of positive comparable sales came at the hands of a 0.4% unit-level dip on the restaurant front -- as a 2.1% slide in traffic wasn't overcome by a 1.7% uptick in average check size -- and a brutal 4.7% hit in comps at its attached country stores.
The guidance that Cracker Barrel offered in May was mixed. It increased its earnings-per-share outlook for all of fiscal 2017 to between $8.25 and $8.35, up from its earlier range of $8.10 to $8.25. Unfortunately its top-line goal of $2.95 billion for the entire fiscal year was just shy of where the stock's analysts were waiting. Investors often applaud bottom-line growth and margin expansion over revenue spurts, but the concern here is that the concept's popularity is going through a rough patch.
Cracker Barrel isn't standing still. It's opening more stores, and it's also building out its Holler & Dash sibling concept that gives gourmet biscuit sandwiches a fast-casual spin. The restaurateur also boosted its dividend in May, a move that pushes its current yield to 3.9%. The chain has also sprinkled some hefty special dividends into the mix. Its springtime guidance finds analysts taking a cautious stance as we approach Wednesday's report, but Cracker Barrel has managed to beat analyst earnings estimates handily for three consecutive quarters. If it wants to become a rare market darling in the casual-dining space space again, it will have to make sure that it can offer an upbeat top-line outlook for fiscal 2018, too.