Buy, Sell, or Hold Cracker Barrel Stock?

Core Insights - Cracker Barrel Old Country Store Inc. has experienced a decline of over 10% in stock price, closing near $55, following a controversial logo change and negative impacts from new tariffs on imported goods [2][3] Valuation - The company is trading at a price-to-sales multiple of 0.3x, significantly lower than the S&P 500's 3.2x, while its P/E ratio stands at 21.3x, roughly in line with the market's 21.5x [4] - The stock appears expensive based on cash flow, with a P/FCF ratio of 48.8x compared to the index at 23.8x [4] Growth - Cracker Barrel's revenue growth has been modest, with a CAGR of 2.9% over the last three years, lagging behind the S&P 500's 5.3% [4] - Revenues increased by only 2.8% over the past year, reaching $3.5 billion, and edged up 0.5% year-over-year in the most recent quarter, compared to the index's 6.0% [4] Profitability - The company reported an operating income of $77 million over the past 12 months, reflecting a low margin of 2.2% [5] - Operating cash flow was stronger at $186 million (5.3% margin), while net income was $58 million (1.6% margin), significantly below the S&P 500 averages [6] Financial Stability - Cracker Barrel has a high debt burden, with $1.1 billion in debt against a market cap of $1.2 billion, resulting in a debt-to-equity ratio of 93.5% compared to the S&P 500 average of 20.7% [6] - The company has limited liquidity, with only $9.8 million in cash out of $2.1 billion in assets, representing just 0.5% [6] Downturn Resilience - Historically, Cracker Barrel has underperformed the S&P 500 during downturns, with a 64.5% decline during the 2022 inflation shock compared to the index's 25.4% [7] - In the 2020 pandemic, shares fell 66.4% versus 33.9% for the index, although it fully recovered in 357 days [7]