Investment Thesis
Cracker Barrel is experiencing severe operational deterioration with negative operating and net income despite stable revenue, indicating fundamental business model stress. The company is burning cash with negative operating cash flow and free cash flow, while maintaining high debt levels with deteriorating interest coverage, creating significant solvency risk.
Strengths
- Reasonable gross margin of 57.1% demonstrates pricing power and cost management in core operations
- Revenue relatively stable with modest 0.4% growth showing maintained customer traffic despite operational challenges
- Modest debt-to-equity ratio of 0.90x provides some leverage flexibility compared to typical retail
Risks
- Negative operating income of -32.3M indicates the business cannot cover operating expenses from core operations
- Severely negative free cash flow of -64.4M combined with only 8.6M in cash reserves creates urgent liquidity concerns
- Deteriorating interest coverage of -9.0x with 381.8M long-term debt signals inability to service debt obligations from operations
- Current ratio of 0.49x indicates working capital deficit and potential inability to meet short-term obligations
- Negative operating and net cash flows despite capital expenditure of 62.3M suggests unsustainable cash burn
Key Metrics to Watch
- Quarterly operating cash flow trend - must return to positive to indicate operational viability
- Debt refinancing needs and covenant compliance with 381.8M long-term debt obligations
- Monthly same-store sales and operating margin recovery path toward profitability
Financial Metrics
Revenue
1.7B
Net Income
-23.3M
EPS (Diluted)
$-1.05
Free Cash Flow
-64.4M
Total Assets
2.1B
Cash
8.6M
Profitability Ratios
Gross Margin
57.1%
Operating Margin
-1.9%
Net Margin
-1.4%
ROE
-5.5%
ROA
-1.1%
FCF Margin
-3.9%
Balance Sheet & Liquidity
Current Ratio
0.49x
Quick Ratio
0.18x
Debt/Equity
0.90x
Debt/Assets
0.0%
Interest Coverage
-9.03x
Long-term Debt
381.8M
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: 2026-03-22T00:16:11.811105 |
Data as of: 2026-01-30 |
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