We can look back and say that the U.S. restaurant space has not been too enticing to investors in 2016. In fact, same-store sales growth had been dull in a difficult sales environment.
However, totally shying away from investing in this space is not wise. In fact, there are a number of companies with a decent performance history and strong fundamentals, that seem to be unperturbed by the plight, thereby signaling a profitable investment opportunity.
One such company is Cracker Barrel Old Country Store, Inc. (CBRL) that continues to reflect strength in several areas and should make a value addition to your portfolio.
Why is Cracker Barrel a Solid Choice?
Stock Price Movement & Other Returns: Cracker Barrel’s shares have outperformed the broader Zacks categorized Retail-Restaurants industry over the past one year. While the stock gained over 35%, the broader industry grew barely 2% in the same time frame.
Moreover, the return on equity (ROE) delivered in the trailing 12 months was an impressive 34.3% compared with the industry gain of 8.6%. This indicates that the company reinvests more efficiently compared with its peers.
Also, Cracker Barrel continuously returns wealth to shareholders via dividends and share repurchases.
Low Beta Stock: A stock with beta less than 1 suggests that the price movement of the stock is not highly correlated with the market. Since they are less volatile than the market, they are safer bet at the moment. Cracker Barrel has an impressive beta of 0.41. Therefore adding it to your portfolio will bring down the overall beta, thereby reducing its risk.
Earnings History and Estimate Revisions: Cracker Barrel has beaten earnings estimates in each of the trailing four quarters, with an average beat of 2.96% in the last four quarters.
Meanwhile, over the past 60 days, the Zacks Consensus Estimate increased 2.1% for both 2017 and 2018 earnings. The positive earnings estimate revisions indicate analysts’ confidence and substantiate the Zacks Rank #2 (Buy) for the stock.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. Further, for fiscal 2017, sales growth is pegged at 2%, while EPS is expected to grow a solid 9.1%.
VGM Score: Cracker Barrel has a VGM Score of ‘B’. Our VGM Score identifies stocks that have the most attractive value, growth, and momentum characteristics.
In fact, our research shows that stocks with VGM Scores of ‘A’ or ‘B’ when combined with a Zacks Rank #1 or 2 make solid investment choices, including these other stocks to consider in the sector…
Other favorably placed stocks in this sector, include Wendy’s Co (WEN), Wingstop Inc (WING) and Cheesecake Factory Inc (CAKE). All these stocks carry a Zacks Rank #2.
Wendy’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 28.38%. Further, for 2016, EPS is expected to grow 23.9%.
The Zacks Consensus Estimate for Wingstop’s 2016 earnings climbed 1.8% over the last 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 11.99%.
Cheesecake Factory’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 10.84%. Further, for 2016, EPS is expected to grow 19.5%.
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CRACKER BARREL (CBRL): Free Stock Analysis Report
CHEESECAKE FACT (CAKE): Free Stock Analysis Report
WENDYS CO/THE (WEN): Free Stock Analysis Report
WINGSTOP INC (WING): Free Stock Analysis Report
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