Investment Thesis
Cracker Barrel faces severe fundamental deterioration with negative operating income, critical liquidity constraints (current ratio 0.50), and a debt burden that cannot be serviced from operations (interest coverage -7.2x). While positive OCF and stable revenue provide temporary relief, the combination of operating losses, minimal free cash flow ($2.4M), and stagnant growth (0.4% YoY) indicates structural profitability challenges requiring immediate intervention.
Strengths
- Positive operating cash flow of $92.5M demonstrates underlying business can generate cash despite accounting losses
- Stable revenue base of $2.5B with established brand and physical footprint across casual dining segment
- Reasonable gross margin of 38.7% indicates adequate pricing power on food and beverage offerings
Risks
- Negative operating income of -$25.6M with -1.0% operating margin indicates core business is unprofitable and not generating returns on assets
- Critical liquidity crisis evidenced by current ratio of 0.50 and quick ratio of 0.19, raising solvency concerns and limiting ability to meet short-term obligations
- Substantial debt load of $336.8M with negative interest coverage ratio of -7.2x, creating acute refinancing risk and suggesting inability to service debt from operations
Key Metrics to Watch
- Operating margin recovery path and timeline to positive operating income
- Working capital and liquidity metrics (current ratio, quick ratio, cash position)
- Free cash flow sustainability and debt service coverage ratio improvement
Financial Metrics
Revenue
2.5B
Net Income
19.5M
EPS (Diluted)
$0.86
Free Cash Flow
2.4M
Total Assets
2.1B
Cash
26.1M
Profitability Ratios
Gross Margin
38.7%
Operating Margin
-1.0%
Net Margin
0.8%
ROE
4.2%
ROA
0.9%
FCF Margin
0.1%
Balance Sheet & Liquidity
Current Ratio
0.50x
Quick Ratio
0.19x
Debt/Equity
0.72x
Debt/Assets
0.0%
Interest Coverage
-7.15x
Long-term Debt
336.8M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-06-10T07:33:10.642063 |
Data as of: 2026-05-01 |
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