Earlier this year, CBRL Group
For the lowered sales projections, Cracker Barrel's management blames "continued pressure on consumer discretionary income." There may be some truth to that, as we all know many people are feeling the pinch from higher energy prices, but some restaurants are doing just fine. Results at IHOP
I like Cracker Barrel, as both a customer and a shareholder. While it's not a new high-growth concept like Buffalo Wild Wings
Even after lowered projections, earnings are still expected to grow at least 20% from the $2.50 per share earned in fiscal 2007. Following yesterday's 4.1% drop, you can purchase shares for just 11 times next year's low-end estimate of $3 per share. Granted, the valuation won't improve until sales show some signs of perking up. However, with management focusing on their core concepts, I expect it's only a matter of time before growth improves. Plus, IHOP's recently approved $2.1 billion purchase of Applebee's
The greatest risk with Cracker Barrel, in my opinion, is that the company will continue to mosey along like it's done for several years and fail to outperform the market. But if you're looking for a reliable company with a dividend and some decent upside potential, this is a worthy choice.
Fill your plate with more Cracker Barrel:
Buffalo Wild Wings is a Hidden Gems pick.
Fool contributor Jason Ramage owns shares of CBRL Group. Your comments are more than welcome, so just make yourself at home. The Motley Fool holds stock in Buffalo Wild Wings. If reading about this boring stock wasn't boring enough, the Fool has a disclosure policy.