Cracker Barrel Gains on Forecast

(Updated with additional information and stock prices.)

LEBANON, Tenn. ( TheStreet) -- Cracker Barrel Old Country Store ( CBRL) shares pared early gains but still closed several points higher after the family-style restaurant operator beat fourth-quarter earnings expectations and forecast 2011 profits in line with Wall Street's expectations.

Cracker Barrel grew fiscal fourth quarter profits by 20.2% to $27.4 million, or $1.14 per share, compared with year-earlier earnings of $22.8 million, or 99 cents per share.
Cracker Barrel Old Country Store

Revenue increased by 2.8% to $612.5 million, from $595.6 million.

Cracker Barrel forecast fiscal 2011 profits per share in a range between $3.95 and $4.10, in line with analysts' consensus call for full-year earnings of $4 per share. The Lebanon, Tenn.-based restaurant operator expects full year revenue to grow between 3% and 4.5%, to a range between $2.47 billion and $2.51 billion, in line with expectations for $2.48 billion.

"We continue to face the uncertainty from low economic growth and a slow job recovery," said CEO Michael A. Woodhouse, commenting on Cracker Barrel's 2011 forecast. "What we do know is that families dining out remain focused on value."

Comparable same-store sales, or sales at stores open at least one year, a key metric in the restaurant industry, pushed up 2% in the recent fourth quarter. Comps growth of 3.2% in June and 2.9% in July helped to offset same-store sales declines of 0.3% in May.

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Comparable sales for Cracker Barrel's retail operations, where it sells everything from country-style rocking chairs and seasonal gifts to cookware and old-fashioned candies, grew 2.6% in the recent quarter, led by strength in June.

Average checks improved 1.9% year-over-year in the recent quarter, with traffic up 0.1%.

Performance metrics -- comp sales, restaurant sales and retail sales -- were strongest in June, which Cracker Barrel attributed to the Memorial Day holiday weekend results being shifted to the later month, negatively impacting May's data. Even so, average check amounts were strongest in July.

Cracker Barrel shares closed the session 2.8% higher at $49.94 on more than 3 times their average trading volume.

Elsewhere in the restaurant sector, Yum! Brands, which operates KFC and Taco Bell restaurants, said Tuesday its board approved a 19% dividend increase to 25 cents per share.

The new dividend will be paid on Nov. 5 to shareholders of record at the close of business on Oct. 15.

Yum's previous dividend of 21 cents per share was last paid on July 14.

>>Yum! Dishes Out Bigger Dividend

Yum! shares gained around midday but were unable to hold those gains, closing down less than 0.1% to $45.52.

Cracker Barrel rival Bob Evans Farms ( BOBE) said last month it increased its shareholder payout by 11.1%, bringing its quarterly dividend to 20 cents per share.

>>Dividend Hikes: Bob Evans, Ship Finance

The operator of Bob Evans Restaurants and Mimi's Cafes reported a 21.7% decrease in fiscal-first-quarter profits to $12.6 million, or 41 cents per share, on a 3.9% dip in revenue to $412.6 million.

Despite its declining profits, Bob Evans' earnings managed to beat Wall Street's expectations for a profit of 44 cents per share. Top-line results missed analysts' consensus call for revenue of $422.1 million.

Restaurant stocks have topped headlines in recent weeks after Burger King agreed last week to be taken private for $24 per share. It will be the second time in less than a decade its shares will no longer trade on an exchange.

>>Burger King Agrees to Buyout

Yum! Brands and McDonald's ( MCD) are among analysts' top picks for restaurant stocks to buy now, especially now that Burger King shares are considered passé by savvy investors who know the stock is unlikely to go much higher after the Whopper-and-fries chain agreed to sell itself to New York-based hedge fund 3G Capital.

>> Chipotle, Yum! Hit Record Highs

Bob Evans shares added 0.8% Tuesday and Burger King ticked up 0.3%. McDonald's fell 0.8%.

The PowerShares Dynamic Leisure and Entertainment ( PEJ), an exchange-traded fund that counts CBRL, BOBE, BKC, YUM and MCD among its holdings, traded less than 0.1% lower Tuesday to close at $15.90.

-- Written by Miriam Marcus Reimer in New York.

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