CBRL - Cracker Barrel dropped to an underperform rating at BofA due to macro risks to earnings

Cracker Barrel Old Country Store (NASDAQ:CBRL) slipped 1.58% on Monday after Bank of America warned on macro risks for the restaurant chain. The firm moved to an Underperform rating from Neutral with near-term headwinds continuing to build up. Analyst Sara Senatore and team said the concern is that despite these company specific initiatives, CBRL will find it difficult to fully offset the forces hitting its older and lower income guests that are feeling inflationary pressures. CBRL is also observed have operating leverage that magnifies the risk to earnings. "While Cracker Barrel’s same store sales growth performance through the Global Financial Crisis – presumably a worst case macroeconomic scenario – was relatively stable (comps troughed at -3% in 4QC08), the presence of operating and financial leverage amplified the impact. Adjusted net margin fell 200 bps in F2008 (ended August 2008) despite revenue growth of +1.4%. CBRL carries less financial leverage now,

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Cracker Barrel dropped to an underperform rating at BofA due to macro risks to earnings