Last Update04 Oct 25Fair value Decreased 8.10%
The consensus analyst price target for Cracker Barrel Old Country Store has been revised downward from $51.14 to $47.00. This reflects cautious views from analysts following weaker revenue growth projections and recent challenges impacting sales momentum.
Analyst Commentary
Recent analyst commentary highlights a mix of optimism and concern as Cracker Barrel navigates the aftermath of recent earnings and brand changes. Adjusted price targets reflect this cautious outlook, with specific attention given to near-term challenges and longer-term recovery potential.
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Bullish Takeaways
- Bullish analysts maintain that the core drivers of Cracker Barrel’s brand turnaround remain intact. They suggest that the company could resume growth once the impacts of recent rebranding fade.
- There is a belief that increased marketing and labor investments are strategic moves designed to accelerate sales recovery and support future performance.
- Several analysts highlight that the resumption of marketing efforts, especially around the Fall Menu, could offset recent negative momentum and stimulate traffic improvement going forward.
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Bearish Takeaways
- Analysts express concern over lower initial guidance for fiscal year 2026. Expectations have been reset significantly below previous consensus, signaling skepticism about the pace of recovery.
- There is widespread caution about declining traffic, particularly following the logo change and subsequent media backlash. This has resulted in notable downturns in key operating metrics.
- Bearish analysts flag ongoing execution risks, including lower same-store sales growth and reduced EBITDA outlooks for upcoming quarters.
- Some experts note that negative attention surrounding the brand refresh may dissuade value-oriented consumers and prolong challenges to regaining lost momentum.
What's in the News
- Steak 'n Shake's CEO, Sardar Biglari, has publicly called for the dismissal of Cracker Barrel's CEO following controversy around the company's brief logo change (Wall Street Journal).
- Cracker Barrel reversed its decision to rebrand with a new logo and scrapped the change after public and high-profile political criticism (Bloomberg).
- The company launched a new fall menu campaign featuring country artist Jordan Davis, with seasonal offerings, marketing refreshes, and special events to boost brand appeal (Key Developments).
- Cracker Barrel's updated guidance for fiscal 2026 anticipates total revenue between $3.35 billion and $3.45 billion. This projection factors in a comparable store traffic decline of 4% to 7% (Key Developments).
- The board has authorized a $100 million share repurchase program as part of its latest buyback plan (Key Developments).
Valuation Changes
- Consensus Analyst Price Target has declined from $51.14 to $47.00, reflecting a more conservative outlook.
- Discount Rate has risen slightly from 11.3% to 11.74%, indicating increased perceived risk in future cash flows.
- Revenue Growth expectations have fallen significantly, from 0.96% to 0.66%. This suggests analysts see weaker top-line momentum ahead.
- Net Profit Margin is projected to improve modestly, increasing from 1.69% to 1.91%.
- Future P/E ratio has dropped from 25.58x to 21.21x. This signals lower anticipated earnings multiples applied by the market.
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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