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Cracker Barrel vs. McDonald's: Which One Should You Go With?

Take A Trip Down Memory Lane With Cracker Barrel


  • Earnings continue to surprise on the upside while revenues miss expectations.
  • Cost cutting has improved operating efficiencies and margins.
  • This has been a tremendous “total return” stock for decades and I expect that to continue.
  • Short-term economic risks that could create market volatility shouldn't be a problem.
  • Buy CBRL now and tuck it away!

By Tony Termini

Cracker Barrel may not only conjure up memories but returns as well.

Cracker Barrel Old Country Store (NASDAQ:CBRL) reports its fiscal 2016 3rd quarter earnings in a couple of weeks, and thinking about that took me down memory lane to when we hopped into the family car and drove across country to visit relatives on the east coast. At just about every "pit stop" we made along the journey, our random destinations seemed inevitably to be a CBRL store/restaurant.

I'm not waxing nostalgic here. There's a point. But I'll get to that later. First, I want to go over some of the pros and cons of buying CBRL before it reports on June 1st. And make no mistake, I think CBRL is a buy. That's the takeaway I want to leave you with from this article. I think CBRL is a buy. And I think you want to own it before the next earnings announcement. But I want to clarify a few of the issues that pose some risk in the short term... CONTINUE READING

McDonald's Is Overvalued And Risky


  • The recent rise in MCD’s ROE can be primarily attributed to the company’s increasing leverage.
  • MCD has been trading equity for debt. This is a risky game.
  • MCD doesn’t have much room to increase its dividend.
  • MCD has a fair value of $110.

By S. Hasan Abid

In 2013, when sales of McDonald's (NYSE:MCD) in the U.S. began stagnating, many analysts thought that MCD would fail to compete effectively in a ruthlessly competitive fast food industry. However, in around 2 years, MCD turned things around by offering a more streamlined menu and investing in value enhancing initiatives like All Day Breakfast and McPick 2. In Q1 fiscal 2016, MCD posted a solid 5.4% increase in U.S. comp store sales which clearly is a demonstration of the success of the company's investments in its value platform. Despite the positive developments, I don't find MCD particularly attractive from an investment point of view right now.

First, let's inspect MCD's profitability closely by decomposing the firm's Return on Equity ("ROE") for the period 2013-15 using DuPont Analysis. All figures have been taken from Morningstar... CONTINUE READING

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