CBRL Group (CBRL): Down home cuisine

There is a well-known U.S. restaurant chain that was founded by a traveling salesman, who thought such places should offer family-friendly environments and good country cooking. He got it right.

CBRL Group (NASDAQ: CBRL) operates 564 Cracker Barrel Old Country Store restaurants and gift shops in 41 states. The restaurants offer breakfast, lunch and dinner menus, featuring home-style comfort foods. The associated retail stores offer a variety of decorative, gift and food items. Competitors include Brinker International (NYSE: EAT) and Darden Restaurants (NYSE: DRI).

The firm pleased investors earlier in the week, when it reported solid results for its fiscal fourth quarter and issued in-line guidance for FY08. The board subsequently boosted the quarterly dividend by 29% and declared a one million share buyback program. The stock popped on the quarterly report and has since moved into a bullish "pennant" consolidation pattern. Prices frequently exit pennants moving in the same direction they were traveling when they entered them. In this case, that would be to the upside.

Brokers recommend the issue with two "strong buys", ten "holds" and one "sell". The CBRL P/E ratio (15.25), PEG ratio (1.27), Price to Sales ratio (0.42), Price to Cash Flow ratio (7.44), Price to Free Cash Flow ratio (7.15), EPS Growth rate (35.29%) and Return on Equity (37.39%) compare favorably with industry, sector and S&P 500 averages. Institutions hold about 95% of the outstanding shares. The stock is one of those used to calculate the S&P 400 MidCap Index. Over the past twelve months, it has traded between $35.75 and $50.74. A stop-loss of $35.75 looks good here.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com.