Shares of restaurant chain Cracker Barrel (CBRL 3.08%) have been steadily sliding downwards since early 2021. And on Wednesday, the stock was trading close to its lowest price in over a decade. But the company released results for its fiscal 2025 second quarter Thursday morning and raised its guidance. And that's why Cracker Barrel stock is bouncing back after years of declines, up by as much as 27% this morning and up by about 8% as of 12:15 p.m. ET.
Cracker Barrel finds its footing
Sometimes, investors have such low expectations for a business that anything positive can send its shares soaring. I believe that's the situation with Cracker Barrel now. For its fiscal Q2, which ended Jan. 31, revenue was only up 1.5% year over year and its net income actually dropped by 16%. Neither of those metrics is impressive in isolation. But against weighed investors' low expectations, the company's results looked relatively strong.
NASDAQ: CBRL
Key Data Points
Cracker Barrel's management had been guiding for full-year revenue of $3.4 billion to $3.5 billion. The midpoint of that range would have been a decline from its fiscal 2024 revenue of $3.47 billion. But on Thursday, management raised the low end of its guidance range to $3.45 billion. This suggests that its sales trends are to be stabilizing, which is encouraging news.
Cracker Barrel also said it expects to earn adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $210 million to $220 million, up from a previous guidance range of $200 million to $215 million. In short, there are some positive trends in the business, which got investors excited about Cracker Barrel stock.
Is Cracker Barrel on the right track?
Cracker Barrel is a cheap stock that can further soar, assuming the business is on the right track. As of this writing, its enterprise value is just $1.4 billion, which is quite low for an iconic brand that's expected to have over $200 million in adjusted EBITDA this fiscal year.
Management is implementing a multiyear transformation that includes remodeling restaurants and updating the menu. I personally worried that this plan risked losing some of the things that make Cracker Barrel what it is. However, if the business is starting to gain traction, as the fiscal Q2 results suggest, the stock could have more gains coming over the rest of 2025 and beyond.
