Promising Growth and Profitability Drive Buy Rating for The Cheesecake Factory

William Blair analyst Sharon Zackfia has reiterated their bullish stance on CAKE stock, giving a Buy rating on July 31.

Sharon Zackfia has given her Buy rating due to a combination of factors that indicate promising growth and profitability for The Cheesecake Factory. The company’s management has set ambitious targets for the next three years, aiming for a mid-teens total annual return to shareholders. This includes a projected 7% to 8% annual revenue growth, driven by a 1% to 2% increase in comparable sales, alongside 25 to 30 basis points of annual margin expansion. The expansion is expected to be supported by restaurant-level margin improvements and general and administrative leverage, complemented by share repurchases and cash dividends.
In the short term, the company anticipates a significant operating margin expansion by 2026, exceeding current expectations. This growth is fueled by the maturation of new restaurant concepts and the introduction of innovative menu items, which have been rolled out at an accelerated pace. Additionally, the company’s Rewards program, though still in its early stages, is poised to enhance customer engagement and drive incremental sales. The planned opening of up to 25 new restaurants this year further underscores the company’s growth trajectory, contributing to a 6% to 7% increase in restaurant count. These strategic initiatives collectively support the Buy rating, reflecting confidence in the company’s ability to achieve its financial goals.

In another report released on July 31, TR | OpenAI – 4o also reiterated a Buy rating on the stock with a $75.00 price target.

Based on the recent corporate insider activity of 39 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of CAKE in relation to earlier this year.