CBRL

$CBRL Insiders Bet Big: Major Shareholders Purchase $16.3M in Cracker Barrel Stock After 46% Drop from 52-Week High

05/05/2025 16:30

Shares of $CBRL (Cracker Barrel Old Country Store Inc.) have garnered attention following significant insider purchases in recent weeks. Over the past month, major shareholders GMT Capital and Thomas Claugus have executed concentrated buys totaling 408,900 shares worth approximately $16.3 million. These purchases began in early April after $CBRL's stock had plummeted 46% from its 52-week high of $64.56 recorded in late January 2025. GMT Capital initiated buying on April 4th with 105,900 shares at an average price of $35.94, followed by additional purchases of 31,800 shares on both April 9th and 10th, and 26,500 shares on April 16th. Thomas Claugus subsequently acquired another 211,900 shares between April 25th and May 1st. The two investors appear to be related entities, with disclosure documents indicating they hold stakes through multiple legal entities. Cracker Barrel is known for its distinctive business model operating approximately 660 restaurants and gift shops primarily across the southeastern and midwestern United States. The company has cultivated a loyal customer base through its unique combination of Southern-style comfort food and diverse retail merchandise. These substantial insider purchases occurred during a period of mixed financial performance for the company. In its Q2 2025 results announced on March 6, 2025, Cracker Barrel reported adjusted earnings of $1.38 per share, significantly exceeding analyst expectations of $1.09. Revenue increased by 1.5% year-over-year to $949.44 million. However, the previous quarter (Q3 2024) showed revenue declining 1.9% year-over-year to $817.14 million, with EPS falling to $0.88 from $1.21 a year earlier. Following these earnings releases, on March 10th, investment bank Truist upgraded Cracker Barrel stock to 'buy' with a price target of $55. Truist expressed confidence in sustained improvement due to new menu items and enhanced service quality. Yet the company faces significant challenges. A high debt ratio of approximately 256.59% and a low current ratio of 0.62 raise concerns about financial stability. Additionally, in August 2024, activist investor Biglari announced its intention to nominate five candidates to the board, signaling management tensions. The company responded by affirming its commitment to its strategic transformation plans. From an industry perspective, the restaurant sector continues to face headwinds including inflation, rising labor costs, and reduced consumer spending. Cracker Barrel's restaurant segment revenue declined 1.7% year-over-year in Q3 2024, while retail segment revenue decreased by 3.9%, suggesting consumers are still curtailing discretionary spending. Against this backdrop, the major shareholders' substantial purchases are noteworthy. Insider buying is typically interpreted as a signal that shares may be undervalued or indicative of positive future prospects. By concentrating their purchases after a significant price decline, GMT Capital and Thomas Claugus appear to be expressing confidence in the company's long-term value. Analysts maintain mixed views on Cracker Barrel's outlook. The consensus rating is 'hold' with a median 12-month price target of $55.00, representing a potential upside of approximately 28.7% from the current trading price of $42.74. Moving forward, Cracker Barrel's stock performance will likely be influenced by several factors: progress on its strategic transformation plan, relations with activist investors, changing consumer spending patterns, and perhaps most critically, its ability to manage debt levels. Customer engagement initiatives such as its loyalty program with over 6 million members are positive signs, but overall industry challenges and high debt levels may continue to pressure the stock. While GMT Capital and Thomas Claugus's substantial purchases may provide a positive signal to the market in the short term, investors should closely monitor the company's fundamental financial health and industry trends. The upcoming Q3 2025 earnings announcement, scheduled for May 15, will serve as an important indicator of the company's future direction.

You can receive notifications when news is published.