Citi Reiterates Sell Rating on Cracker Barrel (CBRL), 'Top Line Growth Coming At A Heavy Cost'

Citi analyst Jon Tower reiterated a Sell rating and $36.00 price target on Cracker Barrel (NASDAQ: CBRL)

The analyst comments "In advance of the company’s annual general meeting where an activist investor has been pushing for a Board seat, on 11/14 CBRL released (a) prelim F1Q25 top-line results that bested Citi/Street expectations (2.9% restaurant SSS, $845M revs vs. 1.5%/1.5% and $832M/$829M), (b) F1Q adjusted EBITDA that missed Citi/beat Street ($45.8M vs. $47.1M/$44.5M) and (c) reiterated guidance for FY25. 1-year restaurant SSS (Aug-Oct) improvement is welcomed though this (a) mirrored the industry (e.g., Knapp Track improved each month since July), (b) was inclusive of ~5% pricing, implying traffic/mix remained pressured during F1Q and (c) came with limited flow-though (slight adjusted EBITDA $/margin beat vs. Street and reiteration of guidance) suggesting profits are likely to remain encumbered by heavy investments back into the business. We continue to believe investors will require more evidence that initiatives are taking hold before underwriting management’s multi-year EBITDA targets, keeping the multiple/shares under pressure in the NT."

For an analyst ratings summary and ratings history on Cracker Barrel click here. For more ratings news on Cracker Barrel click here.

Shares of Cracker Barrel closed at $48.81 yesterday.

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