CBRL

Cracker Barrel ($CBRL) Major Shareholder Buys $6.23M Worth of Shares After 46% Decline, Stock Immediately Rebounds

04/11/2025 15:44

Cracker Barrel Old Country Store Inc ($CBRL) has seen a significant insider buying activity, with major shareholder GMT CAPITAL CORP making three substantial purchases totaling 169,500 shares worth approximately $6.23 million in early April. These strategic acquisitions came after the stock had fallen about 46% from its 52-week high, suggesting a potential value play. According to SEC filings, GMT CAPITAL purchased 105,900 shares at an average price of $35.94 on April 4, followed by 31,800 shares at $37.31 on April 9, and another 31,800 shares at $39.01 on April 10. Notably, the fund continued buying despite progressively higher purchase prices. These transactions brought GMT CAPITAL's total holdings to 2,484,000 shares. Cracker Barrel operates approximately 660 unique restaurant and gift shop combinations across 43 states. The Tennessee-based company offers Southern-style home cooking alongside distinctive country-themed retail shops, a business model that sets it apart in the casual dining sector. What began as a popular roadside restaurant has evolved into a significant player in the American comfort food market. CBRL stock has experienced considerable volatility recently. After approaching $65 in late January, the stock plummeted, hitting a low of $35.11 on April 8. However, immediately following GMT CAPITAL's substantial purchases, the stock rebounded to $39.18 on April 9, marking an 11.6% single-day gain. This recovery suggests the market viewed the insider buying as a positive signal. The timing of the stock decline and insider purchases coincided with U.S. trade policy uncertainty. The market, which had been unsettled by President Trump's tariff policies in early April, rallied significantly on April 9 following the announcement of a 90-day tariff pause – the same day as GMT CAPITAL's second purchase. This timing indicates the major shareholder may have accurately identified a market turning point. Cracker Barrel's recent financial performance adds another dimension to this story. On March 6, the company reported fiscal Q2 2025 (ended January 31) results that significantly exceeded analyst expectations, with adjusted earnings per share of $1.38 surpassing the forecast of $1.00. Revenue increased by 1.5% year-over-year to $949.4 million, while adjusted EBITDA rose by 19.6% to $74.6 million. Following these positive results, the company raised its revenue guidance for fiscal 2025. In response to this earnings beat, investment bank Truist upgraded CBRL to 'buy' on March 10, raising its price target to $55. Truist cited new menu items and improved service as factors likely to drive sustained performance improvement. However, not all indicators are positive. Net income decreased by 16% year-over-year to $22.2 million, and profit margins declined from 2.8% to 2.3%. Additionally, a high debt-to-equity ratio of 256.59% and a low current ratio of 0.62 raise concerns about the company's financial stability. The restaurant industry has faced numerous challenges in recent years, including inflation, labor shortages, and changing consumer behavior. Cracker Barrel has not been immune, as evidenced by its approximately 34% stock decline over the past year. However, the recent performance improvements and substantial insider buying suggest the company may be turning a corner. Particularly noteworthy is GMT CAPITAL's decision to purchase shares near the stock's bottom, which aligns with classic value investing principles. Major shareholders typically have deep insights into a company's financial condition and business prospects, making their purchases generally regarded as positive signals. In summary, while CBRL still faces challenges, its improved performance and the vote of confidence from a major shareholder indicate potential recovery. If the company successfully executes its operational efficiency initiatives, menu innovations, and cost management strategies, CBRL stock may have additional upside potential. Investors should monitor key variables including trade policy uncertainty, consumer sentiment shifts, and the company's ability to manage its debt levels.

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