What Happened?

Shares of restaurant company Cracker Barrel (NASDAQ:CBRL) jumped 8.9% in the morning session after Truist analysts upgraded the stock's rating, citing the turnaround potential. The analysts added, "We are upgrading our rating on CBRL to a Buy, from Hold, and increasing ests. and our PT to $55, from $51, on the heels of strong F2Q25 results."

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What The Market Is Telling Us

Cracker Barrel’s shares are extremely volatile and have had 31 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business. 

The biggest move we wrote about over the last year was 10 months ago when the stock dropped 14.7% on the news that the company announced updates related to its strategic transformation plan and capital allocation strategy. 

Specifically, the Board of Directors declared a quarterly dividend of $0.25 per share of the company's common stock, down more than 80% from the previous dividend of $1.30. In addition, the company guided for Q3 and Q4 2024 financial results to be below its previous expectations, mainly due to weaker-than-anticipated traffic. In line with the plan, Cracker Barrel provided FY'2027 sales outlook of approximately $3.8 billion to $3.9 billion and adjusted EBITDA of approximately $375 million to $425 million. Adjusted EBITDA in FY'2025 was expected to be in line with, or slightly lower than, FY'2024 results, with gradual improvement in the second half of fiscal 2026 and further acceleration in fiscal 2027. 

On a more positive note, it maintained its current share repurchase authorization, which had $138 million remaining. Overall, the updates provide challenging aspects that the market might have found tough to digest in the short term.

Cracker Barrel is down 17.9% since the beginning of the year, and at $45.10 per share, it is trading 38% below its 52-week high of $72.73 from March 2024. Investors who bought $1,000 worth of Cracker Barrel’s shares 5 years ago would now be looking at an investment worth $362.92.

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