The firm said it lowered its rating on the restaurant and general store chain based on slow growth within the industry, an increase in competition, and rising commodity costs.
"We rate CRACKER BARREL OLD CTRY STOR (CBRL) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, notable return on equity and reasonable valuation levels. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
Separately, TheStreet Ratings team rates CRACKER BARREL OLD CTRY STOR as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
- CBRL's revenue growth has slightly outpaced the industry average of 6.0%. Since the same quarter one year prior, revenues slightly increased by 0.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
- CRACKER BARREL OLD CTRY STOR has improved earnings per share by 17.6% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CRACKER BARREL OLD CTRY STOR increased its bottom line by earning $4.89 versus $4.41 in the prior year. This year, the market expects an improvement in earnings ($5.58 versus $4.89).
- The net income growth from the same quarter one year ago has significantly exceeded that of the Hotels, Restaurants & Leisure industry average, but is less than that of the S&P 500. The net income increased by 16.8% when compared to the same quarter one year prior, going from $24.60 million to $28.73 million.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Hotels, Restaurants & Leisure industry and the overall market, CRACKER BARREL OLD CTRY STOR's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- You can view the full analysis from the report here: CBRL Ratings Report