Cracker Barrel Stock Has a Dismal Post-Earnings Record

CBRL will report earnings on Sept. 21

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Restaurant name Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) is one of those random stragglers that reports in between earnings seasons. The company will release its results on Tuesday, September 21 before the market opens. For any investor looking at CBRL, there are some caution signs we must bring up.

The stock has a dismal history of post-earnings reactions. Looking back at the last eight quarters, six reports have yielded negative post-earnings moves, including a 5% bear gap last September. Overall though, CBRL averages a muted post-earnings move of 2.9%, regardless of direction, the last two years. 

Cracker Barrel stock is facing off with both its year-to-date and year-over-year breakeven levels. More recently CBRL's recent rally was turned away by its 80-day moving average. 

From a fundamental perspective, Cracker Barrel stock has the most to offer as a dividend play. CBRL currently has a solid price-earnings ratio of 13.42. However, Cracker Barrel stock also has a forward price-earnings ratio of 16.67, which is still a fair value but signals an expected decrease in earnings for the business. Moreover, the company offers a forward dividend of $4.00 and a dividend yield of 2.90%.

Cracker Barrel itself doesn’t provide much growth opportunity or consistency on its top- or bottom-lines. For fiscal 2020, CBRL experienced an 18% decrease in annual revenues and net income fell more than $255 million, taking net losses to $32.4 million for that year. Although these declines were largely because of the COVID-19 pandemic, it is important to note that the restaurant company’s net income had also decreased 10% in fiscal 2019, making two consecutive years of bottom-line declines.

Nonetheless, Cracker Barrel’s trailing 12-month revenues are up slightly, and its trailing 12-month net income has increased by $275 million compared to fiscal 2020, indicating some potential as a recovery play. However, the reward potential is just too small in general for CBRL beyond a dividend play.

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