Cracker Barrel Old Country Store Inc (CBRL, Financial) recently experienced a daily loss of 6.42%, contributing to a 3-month decline of 10.63%. With an Earnings Per Share (EPS) of $3.75, investors are contemplating whether the stock is significantly undervalued. This article delves into a valuation analysis to explore the true worth of CBRL's shares. Read on for a thorough examination of the company's financial health and market positioning.
Company Introduction
Cracker Barrel Old Country Store operates a chain of full-service restaurants across the United States, known for their home-style country food. With a significant portion of revenue generated from their on-site gift shops, Cracker Barrel Old Country Store stands out in the restaurant industry. The company's financials show a stark contrast between the current stock price of $65.67 per share and the GF Value of $117.36, suggesting that the shares might be significantly undervalued. This juxtaposition sets the stage for a deeper investigation into the company's intrinsic value.
Summarize GF Value
The GF Value is a unique metric that estimates the intrinsic value of a stock by considering historical trading multiples, a GuruFocus adjustment factor based on past performance and growth, and future business performance estimates. If a stock's price is well below the GF Value Line, it indicates that the stock may be undervalued and could offer higher future returns. Presently, with a market cap of $1.50 billion, Cracker Barrel Old Country Store (CBRL, Financial) appears to be significantly undervalued, according to the GF Value assessment.
Given this undervaluation, the long-term return of CBRL's stock could potentially outpace its business growth, presenting an attractive opportunity for investors.
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Financial Strength
Investing in companies with robust financial strength is crucial to avoid permanent capital loss. Cracker Barrel Old Country Store's cash-to-debt ratio is lower than 98.83% of its peers in the Restaurants industry, placing its financial strength at a fair level with a GuruFocus ranking of 5 out of 10. This assessment underscores the importance of evaluating the company's balance sheet before making investment decisions.
Profitability and Growth
Consistent profitability is a sign of a less risky investment. Cracker Barrel Old Country Store has maintained profitability for 9 out of the past 10 years. The company's operating margin of 3.33% ranks in the middle compared to its industry peers. With a profitability rank of 7 out of 10, the company's financial results are fair.
Growth is a pivotal factor in a company's valuation. Cracker Barrel Old Country Store's 3-year average revenue growth rate surpasses 76.36% of the companies in the Restaurants industry. However, its 3-year average EBITDA growth rate is lower than 58.17% of its counterparts, indicating mixed growth performance.
ROIC vs WACC
Comparing a company's Return on Invested Capital (ROIC) with its Weighted Average Cost of Capital (WACC) can reveal its value creation efficiency. Cracker Barrel Old Country Store's ROIC of 5.27 is currently below its WACC of 6.92, suggesting that the company may not be generating sufficient returns on its investments.
Conclusion
In summary, Cracker Barrel Old Country Store (CBRL, Financial) appears to be significantly undervalued. The company has a fair financial condition and profitability, with growth that ranks below average within the Restaurants industry. For a more detailed look into Cracker Barrel Old Country Store's financials, investors can explore its 30-Year Financials here.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
