The stock market is a dynamic arena, with prices fluctuating in response to a myriad of factors. Cracker Barrel Old Country Store Inc (CBRL, Financial) recently experienced a daily loss of 7.02%, contributing to a 3-month decline of 20.23%. Despite these fluctuations, the company boasts an Earnings Per Share (EPS) of $3.75. This raises an important question for investors: Is CBRL significantly undervalued? The following analysis seeks to address this question by delving into the company's valuation.
Company Introduction
Cracker Barrel Old Country Store Inc operates a chain of full-service restaurants across the United States, known for their home-style country food and unique gift shops. With a current stock price of $55.91 and a GF Value of $117.55, there appears to be a significant discrepancy suggesting that the stock may be undervalued. This valuation gap sets the stage for an in-depth analysis of the company's intrinsic value, blending financial metrics with key business insights.
Summarize GF Value
The GF Value is a unique measure of a stock's intrinsic value, incorporating historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. When a stock's price is significantly below the GF Value Line, it is often considered undervalued and may promise higher future returns. Currently, Cracker Barrel Old Country Store (CBRL, Financial) exhibits signs of being significantly undervalued with a market cap of $1.20 billion, suggesting potential for a higher long-term return compared to its business growth.
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Financial Strength
Before investing, assessing a company's financial strength is crucial. Cracker Barrel Old Country Store's cash-to-debt ratio is less than ideal, placing it lower than 98.83% of its peers in the Restaurants industry. However, its overall financial strength score is a moderate 5 out of 10, suggesting that the company's financial health is fair.
Profitability and Growth
Profitability is a key indicator of a company's risk profile. Cracker Barrel Old Country Store has maintained profitability for 9 out of the last 10 years. Although its operating margin is below average within the industry, the company's profitability rank is considered fair. Growth is equally important; Cracker Barrel Old Country Store's annual revenue growth outperforms 72.29% of its industry peers, but its 3-year average EBITDA growth is less impressive.
ROIC vs. WACC
Comparing a company's Return on Invested Capital (ROIC) to its Weighted Average Cost of Capital (WACC) can reveal its value creation potential. Cracker Barrel Old Country Store's ROIC is currently lower than its WACC, indicating that it is not generating sufficient returns relative to its capital costs.
Conclusion
In summary, Cracker Barrel Old Country Store (CBRL, Financial) appears to be significantly undervalued. The company's financial condition and profitability are rated as fair, and its growth rate is competitive within the industry. For a more detailed financial overview of Cracker Barrel Old Country Store, interested investors can review the company's 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.
