Cracker Barrel Old Country Store, Inc. (CBRL) is gearing up to unveil its fourth-quarter fiscal 2024 earnings on September 19th. The company’s recent performance saw a strong earnings surprise of 57.1% in the last reported quarter, making this upcoming report highly anticipated.
Analysts are expecting a more subdued performance this time around. The Zacks Consensus Estimate for fiscal fourth-quarter earnings per share is set at $1.17, a significant decrease of 34.6% compared to the $1.79 reported in the same period last year. However, revenue is projected to grow by 7.4% year-over-year, reaching $898.8 million.
So, what factors might shape Cracker Barrel’s Q4 results? The company’s top line is likely to benefit from strategic initiatives like menu innovation, higher menu pricing, and expansion efforts. Notably, Cracker Barrel introduced $5 take-home meals at the start of fiscal 2024, capitalizing on the growing demand for its breakfast offerings, including Homestyle Chicken, French Toast, Barrel Bites, and beverages. This move is expected to contribute positively to revenue growth.
Moreover, Cracker Barrel’s focus on off-premise sales, including curbside delivery, third-party delivery, and family meal baskets, has been paying off. These efforts are likely to have bolstered off-premise sales during the quarter.
However, the company faces headwinds in the form of declining traffic and same-store sales. Our model projects Restaurant and Retail revenues to increase by 7.9% and 6.9% year-over-year, respectively, reaching $715.9 million and $168.2 million. Nevertheless, retail same-store sales are forecasted to dip by 0.5% year-over-year. This decline can be attributed to broader industry pressures, particularly within discretionary categories.
Strategic investments in advertising and labor, while crucial for growth, have also contributed to increased costs and margin pressure. Our model anticipates a 9% year-over-year surge in labor and related expenses, reaching $332.6 million in the fourth quarter. Store-operating expenses are projected to climb by 8.4% to $821.6 million. As a result, adjusted-operating income is expected to decline by 30.7% year-over-year to $27.6 million.
While the overall picture might seem mixed, our proven model predicts an earnings beat for Cracker Barrel. The combination of a positive Earnings ESP (+2.74%) and a Zacks Rank #2 (Buy) increases the likelihood of a positive earnings surprise.
Here are a few other companies in the Zacks Retail-Wholesale sector that our model predicts could also outperform earnings expectations this reporting cycle:
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Domino’s Pizza, Inc. (DPZ):
With an Earnings ESP of +3.94% and a Zacks Rank #3 (Hold), Domino’s has seen its stock price rise by 6.4% in the past year. The company has consistently exceeded earnings estimates in the last four quarters, delivering an average surprise of 11.2%.*
Papa John’s International, Inc. (PZZA):
Papa John’s holds an Earnings ESP of +2.11% and a Zacks Rank #3. While its stock price has declined by 32.9% in the past year, the company has beaten earnings estimates in three out of the last four quarters, with an average surprise of 13.6%.*
Starbucks Corporation (SBUX):
Starbucks currently has an Earnings ESP of +2.61% and a Zacks Rank #3. Its stock price has dipped slightly by 0.5% in the past year. The company has a mixed track record, exceeding earnings estimates in two out of the last four quarters and missing twice, with an average surprise of 1.7%.Overall, Cracker Barrel’s Q4 earnings report will be closely watched to gauge the company’s ability to navigate the current economic climate and its long-term growth prospects. The company’s success in balancing revenue growth initiatives with cost management will be a key factor in determining its future performance.
