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Cracker Barrel (CBRL) to Post Q3 Earnings: What’s in Store?


Cracker Barrel Old Country Store, Inc. CBRL is scheduled to report third-quarter fiscal 2018 results on May 22, before market opens. In second-quarter fiscal 2018, the company’s earnings surpassed the Zacks Consensus Estimate by 12.8%.

Q3 Expectations

The question lingering in investors’ minds now is whether Cracker Barrel will be able to deliver a positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for third-quarter earnings is pegged at $1.93, lower than $1.95 reported in the year-ago quarter. Of late, the company’s earnings estimates have been stable. In second-quarter fiscal 2018, it witnessed earnings growth of 24.7% on a year-over-year basis.

Meanwhile, analysts polled by Zacks expect revenues of nearly $715.2 million, up 2.1% from the prior-year quarter.

Let’s delve deeper to find out how the company’s top and bottom line will shape up this earnings season.

Factors at Play

Cracker Barrel’s top line in the quarter is likely to be driven by unit expansion, menu innovation, increased focus on retail business and seasonal promotions. As part of menu innovation, the company introduced crafted coffee in about 350 stores by the end of the fiscal second quarter. The company believes that the platform will complement the strength of its breakfast all day offering, drive check favorability and promote guest perceptions of menu variety.

The company is stressing on growth in its off-premise business. It is introducing a catering menu and in-store training of hourly employees to enhance business. Anticipating off-premise sales to be the primary source of full-year sales, the company is investing in marketing efforts like social and digital messaging, geo-targeted consumer emails and in-store collateral.

In order to drive traffic, Cracker Barrel relies heavily on seasonal promotions and limited-time offers to boost its top-line performance as these are appealing to both regular users and less-frequent guests. In fiscal 2018, the company aims to meet consumers' needs for convenience via growth in its off-premise business. In fact, the company plans to enhance its off-premise platform by introducing new catering menu offering and in-store training of hourly employees.

However, the company’s bottom line is likely to be impacted by an increase in cost of goods sold owing to commodity inflation. Nevertheless, Cracker Barrel has a wide range of cost-cutting mechanisms in place. The company altered its retail sales and service structure in a way that allows it to deploy fewer associates during the outlet’s low-volume hours, thereby reducing in-store hourly labor by 25-30 hours per week. Notably, for fiscal 2018, the company is attempting to deliver between $7 and $8 million in annual cost savings.

Cracker Barrel Old Country Store, Inc. Price, Consensus and EPS Surprise

What Does the Zacks Model Unveil?

Our proven model does not show that Cracker Barrel is likely to beat earnings estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Cracker Barrel has an Earnings ESP of 0.00%. Although, the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise. You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Releases

Darden DRI reported mixed third-quarter fiscal 2018 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same. Adjusted earnings of $1.71 per share increased 29.5% year over year on the back of higher revenues.

Restaurant Brands’ QSR first-quarter 2018 earnings and revenues outpaced the Zacks Consensus Estimate. Earnings under the previous accounting standard came in at 67 cents, improving 86.1% year over year.

Chipotle’s CMG first-quarter 2018 earnings surpassed analysts’ expectations, while revenues were in line with the same. Adjusted earnings of $2.13 per share surged 33.1% from the year-ago quarter, courtesy of higher revenues and lower food costs.

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