What Happened?
Shares of restaurant company Cracker Barrel (NASDAQ: CBRL) jumped 10.6% in the afternoon session after the company reported strong preliminary first-quarter results for fiscal 2025, which beat Wall Street's revenue, adjusted EBITDA and EPS estimates.
Management added, "We are pleased that our comparable store sales and traffic results outperformed the Casual Dining industry." The company also reaffirmed full-year sales and EBITDA forecast, which is encouraging. Overall, the results suggest markets can anticipate no major downside surprises when the company officially reports first-quarter earnings.
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What The Market Is Telling Us
Cracker Barrel’s shares are very volatile and have had 25 moves greater than 5% over the last year. But moves this big are rare even for Cracker Barrel and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 6 months ago when the stock dropped 14.7% after the company announced updates related to its strategic transformation plan and capital allocation strategy.
Specifically, the Board of Directors declared a quarterly dividend of $0.25 per share of the company's common stock, down more than 80% from the previous dividend of $1.30.
In addition, the company expects Q3 and Q4 2024 financial results to be below its previous expectations, mainly due to weaker-than-anticipated traffic. In line with the plan, Cracker Barrel provided FY'2027 sales outlook of approximately $3.8 billion to $3.9 billion and adjusted EBITDA of approximately $375 million to $425 million. Adjusted EBITDA in FY'2025 is expected to be in line with, or slightly lower than, FY'2024 results, with gradual improvement in the second half of fiscal 2026 and further acceleration in fiscal 2027.
On a more positive note, it maintained its share repurchase authorization, which has $138 million remaining.
Overall, the updates provide challenging aspects that the market might find tough to digest in the short term.
Cracker Barrel is down 37.5% since the beginning of the year, and at $48.30 per share, it is trading 41.8% below its 52-week high of $83 from December 2023. Investors who bought $1,000 worth of Cracker Barrel’s shares 5 years ago would now be looking at an investment worth $299.70.
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