Last Update 01 Nov 25
Analysts have lowered their average price target for Cracker Barrel Old Country Store by several dollars. This adjustment reflects ongoing concerns over weaker sales trends and the impact of recent brand changes.
Analyst Commentary
Recent adjustments to Cracker Barrel’s price targets have prompted renewed discussion among analysts about the company’s prospects. Divergent views highlight both ongoing challenges and areas of resilience for the brand as it navigates rebranding efforts and evolving sales trends.
Bullish Takeaways- Bullish analysts maintain that the fundamental drivers behind Cracker Barrel's turnaround remain intact. There is an expectation that marketing initiatives could help sales start to recover from recent setbacks.
- Despite a lower initial fiscal 2026 guidance, investment in marketing and labor is viewed as supportive for a sustainable sales rebound.
- Some analysts view the recent dip in share price as a buying opportunity. They expect that the core brand strengths will emerge as the company resumes key promotional campaigns.
- Bearish analysts have expressed concern that the recent logo change and associated publicity have led to a notable decline in guest traffic, with trends remaining negative at the start of fiscal Q1.
- Lowered guidance for fiscal 2026 and downward revisions to EBITDA and EPS estimates underscore worries about the near-term financial outlook and uncertainty around recovery timing.
- Skepticism persists regarding the brand's customer base and potential impact from negative consumer sentiment, especially as the company works through the backlash from its rebranding efforts.
- There is caution surrounding the ability of new strategies to drive a sustained improvement in same-store sales given the competitive environment and recent execution missteps.
What's in the News
- Steak 'n Shake CEO Sardar Biglari, a Cracker Barrel shareholder, publicly called for Cracker Barrel's CEO to be fired following the company's reversal on its logo change (Wall Street Journal).
- Cracker Barrel abandoned its new logo plans and reverted to the old design after a wave of complaints and public pressure, including criticism from President Donald Trump (Bloomberg).
- Biglari Capital Corp has increased its activism by sharing materials and open letters on social media and shareholder websites, urging changes in company leadership and encouraging shareholders to vote against current directors.
- Cracker Barrel launched a holiday menu featuring returning favorites like Country Fried Turkey and new items such as a Breakfast Burger. The company also enhanced staff training to reinforce tradition and quality.
- The company recently posted a presentation to its proxy solicitation campaign website in an effort to engage shareholders ahead of the annual meeting.
Valuation Changes
- Fair Value remains unchanged at $46.38 per share.
- Discount Rate has risen slightly, moving from 12.04% to 12.32%.
- Revenue Growth estimate has increased modestly from 0.51% to 0.51%.
- Net Profit Margin projection has improved, rising from 1.65% to 1.92%.
- Future P/E has fallen from 24.59x to 21.25x. This indicates lower expected valuations relative to forecasted earnings.
Key Takeaways
- Enhanced guest experience and service standards may boost customer satisfaction and same-store sales growth through improved guest journey mapping.
- Investments in digital, off-premise channels and efficient menu processes are expected to enhance profitability, execution, and potentially lower labor costs.
- Macroeconomic uncertainties, supply chain issues, and elevated expenses could pressure revenue growth and compress net margins.
Catalysts
About Cracker Barrel Old Country Store- Develops and operates the Cracker Barrel Old Country Store concept in the United States.
- Cracker Barrel's focus on evolving and improving guest experience through comprehensive guest journey mapping and new service standards may drive higher customer satisfaction and repeat visits, positively impacting same-store sales growth.
- The company's strategic transformation includes enhancing its menu with craveable items and simplifying processes in the back of the house, which is expected to improve execution and lower labor costs, potentially boosting net margins.
- Investment in digital and off-premise channels, including a more profitable dine-in focus and streamlined offerings, has already improved EBITDA and is expected to continue bolstering future profitability.
- Cracker Barrel's remodel and refresh program, which remains in the test-and-learn phase, aims to significantly enhance store atmosphere and guest experience, potentially leading to increased foot traffic and higher sales, positively affecting revenue growth.
- The strategic refinement of Cracker Barrel's pricing capability, combined with a strong value perception among consumers, supports potential future price adjustments, which could drive revenue without sacrificing customer base, thereby enhancing overall earnings.
Cracker Barrel Old Country Store Future Earnings and Revenue Growth
Assumptions
How have these above catalysts been quantified?- Analysts are assuming Cracker Barrel Old Country Store's revenue will decrease by 0.8% annually over the next 3 years.
- Analysts assume that profit margins will increase from 1.6% today to 2.4% in 3 years time.
- Analysts expect earnings to reach $86.3 million (and earnings per share of $3.82) by about September 2028, up from $57.8 million today.
- In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 19.6x on those 2028 earnings, up from 19.4x today. This future PE is lower than the current PE for the US Hospitality industry at 23.9x.
- Analysts expect the number of shares outstanding to grow by 0.28% per year for the next 3 years.
- To value all of this in today's terms, we will use a discount rate of 11.5%, as per the Simply Wall St company report.
Cracker Barrel Old Country Store Future Earnings Per Share Growth
Risks
What could happen that would invalidate this narrative?- There are macroeconomic uncertainties and consumer anxiety, which could impact consumer spending and lead to softer traffic trends, potentially affecting revenue growth.
- Challenges in maintaining supply chain reliability, such as egg supply issues due to avian influenza, could lead to increased costs and impact net margins.
- The company plans to refinance the $300 million convertible debt, with expectations of higher interest rates, which could result in increased interest expenses and affect earnings.
- The retail segment saw a decrease in revenue by 2.8%, indicating potential vulnerabilities in consumer retail spending that could continue to pressure total revenue.
- Elevated corporate expenses, including legal accruals and investments in strategic initiatives, could increase G&A as a percentage of sales and compress net margins.
Valuation
How have all the factors above been brought together to estimate a fair value?- The analysts have a consensus price target of $55.429 for Cracker Barrel Old Country Store based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $69.0, and the most bearish reporting a price target of just $47.0.
- In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $3.6 billion, earnings will come to $86.3 million, and it would be trading on a PE ratio of 19.6x, assuming you use a discount rate of 11.5%.
- Given the current share price of $50.36, the analyst price target of $55.43 is 9.1% higher.
- We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.
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Disclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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