Cracker Barrel Faces Declining Traffic and Elevated Costs Amid Competitive Pressures, Analyst Reiterates Sell Rating

In a report released today, Sara Senatore from Bank of America Securities reiterated a Sell rating on Cracker Barrel (CBRL – Research Report), with a price target of $45.00.

Sara Senatore’s rating is based on several key factors impacting Cracker Barrel’s performance. Despite some positive commentary from the company regarding improved trends, Cracker Barrel experienced a significant decline in traffic of approximately 5.3% in the third quarter. This decline was notably worse than that of its full-service peers, who faced similar industry challenges, suggesting that Cracker Barrel may be struggling more than its competitors.
Additionally, while Cracker Barrel’s third-quarter EBITDA exceeded expectations due to timing shifts in general and administrative expenses, the underlying costs are expected to normalize in the fourth quarter. The company is also facing elevated operational expenses as it invests in advertising and media, which could offset potential savings from labor efficiencies. With Cracker Barrel trading at a higher price-to-earnings ratio relative to its historical averages and the broader market, combined with negative traffic trends and competitive pressures in the family dining segment, Sara Senatore reiterates a Sell rating with a price objective of $45.

In another report released on May 23, Citi also maintained a Sell rating on the stock with a $42.00 price target.