After years of struggling with COVID-related disruptions, labor shortages, inflation, and shifting consumer habits, Cracker Barrel (NASDAQ: CBRL) is turning a corner. The FQ4 and full-year 2024 results are lackluster, and the guidance is tepid, but it could have been worse, much worse, and there is an expectation that improvements will continue gaining traction in F2025. It may take time for the market to build a stronger base and set itself up to sustain a rally, but lower prices are unlikely, and there is a dividend to consider.
A growing expectation for a distribution cut was among the factors driving the share price action over the past two years, confirmed last quarter. With the payment right-sized to the current operational quality, the payout ratio is a sustainable 30% of the 2025 outlook, yielding 2.4% to investors buying near the current lows.
Investors shouldn't expect a dividend increase soon: sustainability is the operative word. Cracker Barrel has a fortress balance sheet that can sustain the current payment while it invests in its turnaround efforts. These include optimizing menu and price, remodeling, and improving customer experiences to drive revenue growth and widening margin.
Cracker Barrel Struggles in Q4 Despite Growth
Cracker Barrel's struggles are not over. The Q4 revenue of $894.4 million is up nearly 7% compared to last year, but due to one-offs like an extra 53rd ...
