Bull of the Day: Cracker Barrel (CBRL)

Forget about the recent bump up in oil prices, the price of gasoline at the pump is collapsing to levels unseen in years. And with broad economic factors at play-- such as increased Iranian production or a lack of coordination from OPEC-- oil could stay low for quite some time.

CBRL in FocusWhile this could be bad news for people involved in the oil industry, it looks to be great for those in the restaurant business. With extra discretionary income consumers seem poised to spend it at places like restaurants, making Cracker Barrel (CBRL - Snapshot Report) an interesting choice for investors ahead of its earnings report next month.

Cracker Barrel is a potential top play for low gas prices because so many of its stores are along interstate highways. Since pretty much everyone needs to drive to get to a Cracker Barrel Old Country Store, the company could be a prime beneficiary of lower gasoline costs for the average customer.

Analysts seem to agree with this line of thinking as we have seen some movement in the Zacks Consensus Estimate, as well as positive earnings estimate revisions as of late. Current projections now bake in an 8% growth rate for both the current year and the next year time frame, while there has been 100% agreement from analysts in this time periods too.

Earnings Season

It is also worth noting that CBRL currently has a very positive Zacks Earnings ESP, over 3% right now. When you add this to Cracker Barrel's Zacks Rank #1 (Strong Buy), you have a very good case for an earnings beat at the upcoming report.

Plus, the company has a great track record at earnings season, including an average beat of over 9% in the past four reports. CBRL has clearly shown it can live up to lofty expectations and analysts are really liking the story heading into the upcoming earnings report for this top ranked stock.

Bottom Line

But CBRL stands out as a potential strong beneficiary in this current environment, while its track record at earnings season is pretty solid too. So if you are looking to jump in on the restaurant space heading into February, make sure to give Cracker Barrel a closer look for your portfolio.In general, lower gas prices look to help the restaurant sector in the months ahead. Stocks here look to benefit from consumers having more in discretionary income, while the jobs market is holding up nicely too. That is why the segment currently has a Zacks Industry Rank that is in the top 20% overall and why in this industry there are only two strong sells out of 56 companies (and one of those is Chipotle which obviously has other issues).

by Eric Dutram

- Source: http://www.zacks.com/commentary/69777/bull-of-the-day-cracker-barrel-cbrl#sthash.Mapo8Abf.dpuf