Truist lifts Cracker Barrel stock rating, price target to $55

On Monday, Truist Securities raised its rating for Cracker Barrel (NASDAQ:CBRL) stock from Hold to Buy, setting a new price target at $55, up from the previous $55. The upgrade follows Cracker Barrel’s robust financial performance for the second quarter of fiscal year 2025, reported on March 6, 2025. With a current market capitalization of $953 million and a stock price of $42.82, InvestingPro analysis indicates the stock is currently undervalued relative to its Fair Value. Analysts at Truist Securities believe that the company’s ongoing turnaround efforts are bearing fruit, as evidenced by two consecutive quarters of solid results.

The analysts highlighted that Cracker Barrel’s current valuation does not fully reflect the potential for sustained improvement. They noted that the stock is trading at a calendar year 2026 estimated price-to-earnings (P/E) ratio of 11.5 times, which is below their target P/E ratio of 16 times and the three-year average of 14 times. According to InvestingPro data, the stock’s current P/E ratio stands at 26.71x, with eight analysts recently revising their earnings expectations downward. For deeper insights into Cracker Barrel’s valuation metrics and future potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.

Cracker Barrel’s recent strides in menu innovation and enhanced service levels have allowed the company to implement significant pricing adjustments. This has led to a better trajectory in customer traffic, higher consumer satisfaction scores, including perceived value, and improved margins. These advancements have been achieved ahead of the anticipated positive impact from a planned remodel program.

Truist Securities’ revised price target of $55 represents an increase from the former target of $51. The analysts’ optimistic outlook is based on the restaurant chain’s consistent performance and the expectation of continued growth and efficiency gains.

Investors have taken note of Cracker Barrel’s progress, as the company remains in the early stages of its turnaround. The positive assessment from Truist Securities underscores the potential for Cracker Barrel’s stock value to align more closely with the firm’s higher P/E ratio target in the near future. Despite a challenging YTD return of -18.64%, InvestingPro data shows the company has maintained dividend payments for 44 consecutive years, demonstrating long-term financial stability.

In other recent news, Cracker Barrel Old Country Store reported its Q1 2025 earnings, surpassing expectations with an adjusted earnings per share of $1.38, significantly higher than the forecasted $0.99. The company’s revenue also exceeded projections, totaling $949.4 million against an expected $939.97 million. Despite this strong performance, BofA Securities adjusted its stance on Cracker Barrel, reducing the price target to $48 from $60 while maintaining an Underperform rating. This adjustment reflects a reassessment of the company’s near-term prospects amid broader industry challenges, despite Cracker Barrel’s robust holiday and catering sales performance in the second quarter.

Cracker Barrel’s strategic initiatives in menu innovation and operational improvements positively impacted its financial results, with a notable 4.7% growth in comparable store restaurant sales. However, retail sales experienced a slight decline of 2.8%. Analysts at BofA Securities anticipate that Cracker Barrel’s positive same-store sales growth momentum will persist into the second half of 2025, supported by enhanced marketing efforts including new television and billboard advertising campaigns. The company maintains strong full-year revenue guidance of $3.45-$3.5 billion, with adjusted EBITDA projected between $210-$220 million.

Cracker Barrel’s strategic focus on operational execution and marketing appears to be a bid to strengthen its position within a competitive industry landscape. The company has experienced some softness in the current quarter-to-date, attributed primarily to severe weather conditions, although there has been a notable uptick in performance in the last two weeks. As the company navigates these challenges, investors and analysts will continue to monitor its performance closely.

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