Positive earnings growth hasn't been enough to get Cracker Barrel Old Country Store (NASDAQ:CBRL) shareholders a favorable return over the last year

By
Simply Wall St
Published
March 15, 2022
NasdaqGS:CBRL
Source: Shutterstock

It's easy to match the overall market return by buying an index fund. But if you buy individual stocks, you can do both better or worse than that. Investors in Cracker Barrel Old Country Store, Inc. (NASDAQ:CBRL) have tasted that bitter downside in the last year, as the share price dropped 32%. That's well below the market decline of 3.8%. At least the damage isn't so bad if you look at the last three years, since the stock is down 25% in that time. But it's up 5.7% in the last week.

While the stock has risen 5.7% in the past week but long term shareholders are still in the red, let's see what the fundamentals can tell us.

Check out our latest analysis for Cracker Barrel Old Country Store

While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. By comparing earnings per share (EPS) and share price changes over time, we can get a feel for how investor attitudes to a company have morphed over time.

Even though the Cracker Barrel Old Country Store share price is down over the year, its EPS actually improved. It could be that the share price was previously over-hyped.

It's surprising to see the share price fall so much, despite the improved EPS. But we might find some different metrics explain the share price movements better.

Cracker Barrel Old Country Store's dividend seems healthy to us, so we doubt that the yield is a concern for the market. From what we can see, revenue is pretty flat, so that doesn't really explain the share price drop. Of course, it could simply be that it simply fell short of the market consensus expectations.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth
NasdaqGS:CBRL Earnings and Revenue Growth March 15th 2022

We know that Cracker Barrel Old Country Store has improved its bottom line lately, but what does the future have in store? You can see what analysts are predicting for Cracker Barrel Old Country Store in this interactive graph of future profit estimates.

A Different Perspective

We regret to report that Cracker Barrel Old Country Store shareholders are down 30% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 3.8%. However, it could simply be that the share price has been impacted by broader market jitters. It might be worth keeping an eye on the fundamentals, in case there's a good opportunity. Regrettably, last year's performance caps off a bad run, with the shareholders facing a total loss of 2% per year over five years. We realise that Baron Rothschild has said investors should "buy when there is blood on the streets", but we caution that investors should first be sure they are buying a high quality business. It's always interesting to track share price performance over the longer term. But to understand Cracker Barrel Old Country Store better, we need to consider many other factors. Consider risks, for instance. Every company has them, and we've spotted 2 warning signs for Cracker Barrel Old Country Store you should know about.

For those who like to find winning investments this free list of growing companies with recent insider purchasing, could be just the ticket.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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