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Truist Securities raised its price target on Cracker Barrel (NASDAQ:CBRL) stock to $65 from $64 on Friday while maintaining its Buy rating, citing favorable terms on the company’s new convertible notes. Currently trading at $55.05 with a market capitalization of $1.23 billion, InvestingPro data shows the stock is slightly undervalued, with 6 analysts recently revising their earnings estimates upward.
The restaurant chain priced new convertible notes on June 13 with a 1.75% coupon rate, which Truist noted was lower than its previous estimate of 3.0%. Cracker Barrel plans to use proceeds to repurchase approximately half of its existing convertible notes that mature on June 15, 2025. With a debt-to-equity ratio of 2.55, this refinancing move is crucial for the company’s financial health.
Truist views the transaction positively, particularly management’s apparent decision to minimize fiscal year 2026 interest expense by only partially repurchasing the existing notes while likely reducing the company’s revolving credit facility balance with remaining proceeds.
The research firm also highlighted Cracker Barrel’s use of derivatives to effectively increase its conversion premium to 60%, interpreting this as a signal of management confidence, though noting a similar structure in 2021 "when confidence was misplaced."
Truist lowered its interest expense assumptions for Cracker Barrel, resulting in increased earnings per share estimates that supported the higher price target.
In other recent news, Cracker Barrel Old Country Store has announced an upsized offering of $300 million in convertible senior notes due 2030, increased from the initially planned $275 million. The notes will carry a 1.75% annual interest rate, with the company expecting net proceeds of approximately $290.1 million. Cracker Barrel plans to use part of the proceeds to repurchase existing notes and for general corporate purposes. Truist Securities recently raised Cracker Barrel’s stock price target to $64, maintaining a Buy rating, following the company’s fiscal third-quarter 2025 results. The analysts noted improvements in Cracker Barrel’s menu and marketing strategies, which are reflected in strong data trends. Loop Capital also increased its price target for Cracker Barrel stock to $55, maintaining a Hold rating, after the company reported an adjusted earnings per share of $0.58, surpassing estimates. Despite challenges in balancing pricing strategies with customer traffic, the company’s efficiency initiatives are showing positive outcomes. These developments reflect Cracker Barrel’s ongoing efforts to optimize its financial and operational strategies.
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