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Cracker Barrel Old Country Store Inc. (NASDAQ:CBRL) reported preliminary financial results for the year ended 2012-07-31.

Cracker Barrel Old Country Store Inc. reported on Wednesday its preliminary financial results based on which we provide a unique peer-based analysis of the company. Our analysis is based on the company's performance over the last twelve months (unless stated otherwise).

Cracker Barrel Old Country Store Inc.'s analysis versus peers uses the following peer-set: Arcos Dorados Holdings Inc. Cl A (NYSE:ARCO), Brinker International Inc. (NYSE:EAT), Cheesecake Factory Inc. (NASDAQ:CAKE), Zensho Holdings Co. Ltd. (7550-), Buffalo Wild Wings Inc. (NASDAQ:BWLD), Domino's Pizza Group PLC (NYSE:DOM), Bob Evans Farms Inc. (NASDAQ:BOBE), DineEquity Inc. (NYSE:DIN), Biglari Holdings Inc. (NYSE:BH) and Denny's Corp. (NASDAQ:DENN). The table below shows the preliminary results along with the recent trend for revenues, net income and returns.

Annual (USD million)2012-07-312011-07-312010-07-312009-07-312008-07-31
Revenues2,580.22,434.42,404.52,367.32,384.5
Revenue Growth %6.01.21.6(0.7)1.4
Net Income103.185.285.366.065.3
Net Income Growth %21.0(0.1)29.31.0(14.1)
Net Margin %4.03.53.52.82.7
ROE %31.737.152.157.866.3
ROA %7.46.36.55.04.9

Valuation Drivers

Cracker Barrel Old Country Store Inc.'s current Price/Book of 3.9 is about median in its peer group. We classify Cracker Barrel Old Country Store Inc. as Harvesting because of the market's low expectations of growth (P/E of 14.6 compared to peer median of 18.9) despite its relatively high returns (ROE of 31.7% compared to the peer median ROE of 17.5%).

The company's profit margins are below peer median (currently 4.0% vs. peer median of 5.4%) while its asset efficiency is about median (asset turns of 1.9x compared to peer median of 1.7x). Cracker Barrel Old Country Store Inc.'s net margin is its highest relative to the last five years and compares to a low of 2.7% in 2008.

Economic Moat

Growth in Cracker Barrel Old Country Store Inc.'s revenues and earnings have been in-line with its chosen peers (annual revenue growth of 6.0% and earnings growth of 21.0% respectively). Its top-line performance seems to imply 'more of the same' for earnings. Cracker Barrel Old Country Store Inc. is currently converting every 1% of change in revenue into 3.5% change in annual reported earnings.

Cracker Barrel Old Country Store Inc.'s return on assets currently is around peer median (7.4% vs. peer median 7.4%) -- similar to its returns over the past five years (6.0% vs. peer median 6.0%). This performance suggests that the company has no specific competitive advantages relative to its peers.

The company's gross margin of 33.6% is around peer median suggesting that Cracker Barrel Old Country Store Inc. 's operations do not benefit from any differentiating pricing advantage. In addition, Cracker Barrel Old Country Store Inc. 's pre-tax margin of 5.7% is also around the peer median suggesting no operating cost advantage relative to peers.

Growth & Investment Strategy

While Cracker Barrel Old Country Store Inc.'s revenues growth has been around the peer median (2.9% vs. 3.0% respectively for the past three years), the stock's below peer median P/E ratio of 14.6 implies below median long-term growth as well. The market likely sees the company's long-term growth prospects to be fading.

Cracker Barrel Old Country Store Inc. 's annualized rate of change in capital of 5.1% over the past three years is around its peer median of 5.1%. This median investment has likewise generated a peer median return on capital of 11.2% averaged over the same three years. This median return on investment implies that the company is investing appropriately.

Earnings Quality

Cracker Barrel Old Country Store Inc. reported relatively weak net income margins for the last twelve months (4.0% vs. peer median of 5.4%). This weak margin performance and relatively conservative accrual policy (4.5% vs. peer median of 3.7%) suggest the company might likely be understating its net income, possibly to the extent that there might even be some sandbagging of the reported net income numbers.

Cracker Barrel Old Country Store Inc.'s accruals over the last twelve months are positive suggesting a buildup of reserves. In addition, the level of accrual is greater than the peer median -- which suggests a relatively strong buildup in reserves compared to its peers.

Trend Charts

Company Profile

Cracker Barrel Old Country Store, Inc. is engaged in the operation and development of restaurant and retail concepts in the United States. The company operates restaurants under the Cracker Barrel Old Country Store name. Its restaurants provide a friendly home away from home atmosphere in its old country store and restaurant. Cracker Barrel was founded by Dan W. Evins on September 19, 1969 and is headquartered in Lebanon, TN.

Disclaimer

The information presented in this report has been obtained from sources deemed to be reliable, but AnalytixInsight does not make any representation about the accuracy, completeness, or timeliness of this information. This report was produced by AnalytixInsight for informational purposes only and nothing contained herein should be construed as an offer to buy or sell or as a solicitation of an offer to buy or sell any security or derivative instrument. This report is current only as of the date that it was published and the opinions, estimates, ratings and other information may change without notice or publication. Past performance is no guarantee of future results. Prior to making an investment or other financial decision, please consult with your financial, legal and tax advisors. AnalytixInsight shall not be liable for any party's use of this report. AnalytixInsight is not a broker-dealer and does not buy, sell, maintain a position, or make a market in any security referred to herein. One of the principal tenets for us at AnalytixInsight is that the best person to handle your finances is you. By your use of our services or by reading any our reports, you're agreeing that you bear responsibility for your own investment research and investment decisions. You also agree that AnalytixInsight, its directors, its employees, and its agents will not be liable for any investment decision made or action taken by you and others based on news, information, opinion, or any other material generated by us and/or published through our services. For a complete copy of our disclaimer, please visit our website analytixinsight.com.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.