Cracker Barrel Stock Drops After Logo Backlash, What’s Next for Investors?
The Cracker Barrel Old Country Store Inc. (NASDAQ: CBRL) has dropped more than 10% in the past five days, closing near $55 (as of writing). The selloff followed management’s decision to replace its longtime “man on a barrel” logo with a minimalist yellow barrel – a move that sparked backlash on social media and among conservative commentators. Compounding the pressure, new tariffs on imported merchandise such as rocking chairs and seasonal decor have weighed on gift shop sales, prompting the company to scale back inventories and delay product launches.
While the stock may appear inexpensive on a sales multiple, weak growth, thin margins, heavy leverage, and limited downturn resilience outweigh the appeal of its nostalgic brand. The latest bout of volatility underscores these risks. See Buy or Sell Cracker Barrel Stock?
As always, investing in a single stock carries concentrated risk. The Trefis High Quality (HQ) Portfolio is designed to reduce stock-specific risk while giving upside exposure. Separately see, Is Booking Holdings Stock Staring at 40% Downside?
- Broadcom Stock Down 21%,Time to Buy?
- Ambarella Stock To $49?
- Would You Still Hold Southwest Airlines Stock If It Fell 30%?
- Would You Still Hold Palantir Technologies Stock If It Fell Another 30%?
- With Lam Research Stock Sliding, Have You Assessed The Risk?
- Is Fluence Energy Stock Built to Withstand More Downside?
Let’s get into details of each of the assessed factors, but before that, for quick background: With $1.2 Bil in market cap, Cracker Barrel provides Southern-style dining and retail experiences across the U.S., offering breakfast, lunch, dinner, and multiple service options including dine-in, pick-up, and delivery.
[1] Valuation Looks Moderate
CBRL trades at a 0.3x price-to-sales multiple, well below the S&P 500’s 3.2x, and its P/E of 21.3x is roughly in line with the market’s 21.5x. However, the stock looks expensive on a cash flow basis, with a P/FCF of 48.8x versus the index at 23.8x. For more details, see: CBRL Valuation Ratios
[2] Growth Is Weak
Cracker Barrel’s revenue growth has been modest. Over the past three years, sales expanded at a 2.9% CAGR, trailing the S&P 500’s 5.3%. Revenues rose just 2.8% over the last 12 months (to $3.5 billion) and inched up 0.5% year-over-year in the latest quarter, versus the index’s 6.0%. For more details, see: CBRL Revenue Comparison
[3] Profitability Appears Very Weak
Over the past 12 months, CBRL posted operating income of $77 million, a margin of just 2.2%. Operating cash flow was stronger at $186 million (5.3% margin), while net income totaled $58 million (1.6% margin). By comparison, the S&P 500 averages 18.7% operating margin, 20.1% cash flow margin, and 12.8% net margin—underscoring CBRL’s structurally weaker profitability. For more details, see: CBRL Operating Income Comparison
[4] Financial Stability Looks Weak
CBRL carries a heavy balance sheet relative to peers. At quarter-end, debt stood at $1.1 billion against a market cap of $1.2 billion, implying a debt-to-equity ratio of 93.5% versus the S&P 500 average of 20.7%. Liquidity is limited, with cash of just $9.8 million out of $2.1 billion in assets—only 0.5%, compared with the index average of 7.0%.
[5] Downturn Resilience Is Very Weak
CBRL has generally fared worse than the S&P 500 in downturns, with steeper drawdowns and slower recoveries. During the 2022 inflation shock, shares fell 64.5% vs. the index’s 25.4% and remain well below prior highs. In the 2020 pandemic, CBRL dropped 66.4% vs. 33.9%, but fully rebounded in 357 days. In the 2008 financial crisis, the stock plunged 76.9% vs. 56.8%, yet recovered faster—507 days compared to the S&P’s 1,480 days.
Looking for Smarter Alternatives?
You could explore the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid- and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.
Invest with Trefis Market-Beating Portfolios