There wouldn't be many who think Cracker Barrel Old Country Store, Inc.'s (NASDAQ:CBRL) price-to-earnings (or "P/E") ratio of 18.7x is worth a mention when the median P/E in the United States is similar at about 17x. Although, it's not wise to simply ignore the P/E without explanation as investors may be disregarding a distinct opportunity or a costly mistake.
Recent times haven't been advantageous for Cracker Barrel Old Country Store as its earnings have been falling quicker than most other companies. One possibility is that the P/E is moderate because investors think the company's earnings trend will eventually fall in line with most others in the market. If you still like the company, you'd want its earnings trajectory to turn around before making any decisions. If not, then existing shareholders may be a little nervous about the viability of the share price.
Keen to find out how analysts think Cracker Barrel Old Country Store's future stacks up against the industry? In that case, our free report is a great place to start.
What Are Growth Metrics Telling Us About The P/E?
Cracker Barrel Old Country Store's P/E ratio would be typical for a company that's only expected to deliver moderate growth, and importantly, perform in line with the market.
Taking a look back first, the company's earnings per share growth last year wasn't something to get excited about as it posted a disappointing decline of 36%. This means it has also seen a slide in earnings over the longer-term as EPS is down 74% in total over the last three years. So unfortunately, we have to acknowledge that the company has not done a great job of growing earnings over that time.
Shifting to the future, estimates from the nine analysts covering the company suggest earnings growth is heading into negative territory, declining 5.1% over the next year. Meanwhile, the broader market is forecast to expand by 13%, which paints a poor picture.
In light of this, it's somewhat alarming that Cracker Barrel Old Country Store's P/E sits in line with the majority of other companies. It seems most investors are hoping for a turnaround in the company's business prospects, but the analyst cohort is not so confident this will happen. There's a good chance these shareholders are setting themselves up for future disappointment if the P/E falls to levels more in line with the negative growth outlook.
The Key Takeaway
It's argued the price-to-earnings ratio is an inferior measure of value within certain industries, but it can be a powerful business sentiment indicator.
Our examination of Cracker Barrel Old Country Store's analyst forecasts revealed that its outlook for shrinking earnings isn't impacting its P/E as much as we would have predicted. Right now we are uncomfortable with the P/E as the predicted future earnings are unlikely to support a more positive sentiment for long. This places shareholders' investments at risk and potential investors in danger of paying an unnecessary premium.
It is also worth noting that we have found 4 warning signs for Cracker Barrel Old Country Store (1 is potentially serious!) that you need to take into consideration.
It's important to make sure you look for a great company, not just the first idea you come across. So take a peek at this free list of interesting companies with strong recent earnings growth (and a low P/E).
Have feedback on this article? Concerned about the content?Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com. This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
當美國市場中位數報關17倍時,Cracker Barrel Old Country Store,Inc.(NASDAQ:CBRL)的市盈率18.7倍不值得一提。但如果不解釋就簡單地忽略市盈率,投資者可能會忽視一個明顯的機會或者犯下昂貴的錯誤。
最近的時期對於Cracker Barrel Old Country Store來說不利,因爲它的收益比大多數其他公司更快下降。其中一個可能的原因是市盈率適中,因爲投資者認爲公司的收益趨勢最終將與市場上的大多數公司保持一致。如果您仍然喜歡這家公司,在做出任何決定之前,您希望其收益軌跡扭轉。如果不是這樣,那麼現有股東可能會對股票的可行性有些緊張。
想了解分析師如何評價Cracker Barrel Old Country Store的未來?在這種情況下,我們的免費報告是一個很好的起點。
增長指標告訴我們市盈率的什麼?
Cracker Barrel Old Country Store的市盈率在預計僅提供適度增長並且與市場表現相符的公司中是典型的。
有點令人擔憂的是,Cracker Barrel Old Country Store的市盈率與大多數其他公司的市盈率保持一致。看來大多數投資者都希望公司的業務前景有所好轉,但分析師的集體卻不那麼有信心。如果市盈率下跌到與負增長預測相符的水平,這些股東很可能會讓自己陷入未來的失望之中。
重要提示
有人認爲,市盈率是某些行業內價值的劣質測量,但它可以是一個強有力的企業情緒指標。
我們對Cracker Barrel Old Country Store的分析師預測進行的檢查揭示了,預計未來收益的萎縮並沒有像我們預測的那樣對股票市盈率產生太大影響。現在我們對市盈率感到不舒服,因爲預測的未來收益不太可能支持更積極的情緒。這使股東的投資面臨風險,而潛在投資者則面臨支付不必要溢價的危險。
值得注意的是,我們已經發現Cracker Barrel Old Country Store有4個預警信號(其中1個潛在嚴重!)需要考慮。