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Cheesecake Factory (CAKE)
:CAKE
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Cheesecake Factory
(NASDAQ:CAKE)
Rating:73Outperform
Price Target:―
Positive Factors
Financial Performance
The Cheesecake Factory's first-quarter adjusted EPS exceeded guidance and expectations, primarily due to better-than-expected restaurant-level margins.
Market Share
The company is expected to continue gaining market share with its differentiated, experiential brands.
Unit Growth
Enterprise unit growth is expected to approach 6-7%, which exceeds most other companies in the category.
Negative Factors
Competition
Risks include intense competition in a contracting casual dining market, inflationary labor cost pressures, and the margin impact associated with third-party delivery providers.
Macroeconomic Uncertainty
The 2025 outlook was trimmed to the lower end due to macroeconomic uncertainty.
Sales Guidance
Management is reducing sales guidance by about 1% due to potential uncertainty.
Cheesecake Factory (CAKE) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.59B
Dividend Yield2.06%
Average Volume (3M)1.26M
Price to Earnings (P/E)16.4
Beta (1Y)0.83
Revenue Growth4.42%
EPS Growth48.23%
CountryUS
Employees47,900
SectorConsumer Cyclical
Sector Strength72
IndustryRestaurants
Share Statistics
EPS (TTM)0.93
Shares Outstanding49,528,015
10 Day Avg. Volume1,109,564
30 Day Avg. Volume1,261,856
Financial Highlights & Ratios
PEG Ratio-50.05
Price to Book (P/B)0.00
Price to Sales (P/S)0.00
P/FCF Ratio21.78
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$54.00Price Target Upside3.15% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering13
Cheesecake Factory Business Overview & Revenue Model
Company DescriptionThe Cheesecake Factory Incorporated (NASDAQ: CAKE) is a renowned American restaurant company and distributor of cheesecakes based in the United States. Founded in 1972, the company operates upscale casual dining restaurants under The Cheesecake Factory brand as well as other brands like North Italia and a collection of restaurants within the Fox Restaurant Concepts subsidiary. Known for its extensive and eclectic menu, The Cheesecake Factory offers a wide variety of items, including appetizers, seafood, steaks, chicken, burgers, small plates, and a diverse selection of cheesecakes and desserts, catering to a broad demographic of diners.
How the Company Makes MoneyThe Cheesecake Factory primarily generates revenue through its restaurant operations, which include the sale of food and beverages at its numerous restaurant locations both domestically and internationally. A significant portion of its earnings comes from its flagship brand, The Cheesecake Factory, which attracts a large customer base due to its extensive menu and renowned cheesecake offerings. The company also derives income from its other dining brands, such as North Italia and restaurants under the Fox Restaurant Concepts umbrella. In addition to in-restaurant dining, The Cheesecake Factory benefits from takeout and delivery services, which have become increasingly important revenue streams, especially in response to changing consumer preferences and market dynamics. Furthermore, the company earns royalties and licensing fees from its bakery division, which produces cheesecakes and other baked goods for third-party foodservice operators, retailers, and distributors. Partnerships with international licensees further contribute to its revenue, allowing the brand to expand its global footprint and capitalize on international market opportunities.
Cheesecake Factory Financial Statement Overview
Summary
The Cheesecake Factory exhibits strong financial health with consistent revenue and profit growth, backed by solid cash flow performance. The high leverage is a notable risk, but effective cash flow management and profitability mitigate this concern. The company demonstrates the ability to generate and manage cash efficiently, supporting its operational and strategic objectives.Income Statement
The Cheesecake Factory has shown a consistent revenue growth trend over recent years, with a notable 7.2% increase from 2023 to 2024. The gross profit margin remains strong and stable, indicating efficient management of cost of goods sold. Net profit margin has improved, reaching 4.38% in 2024, reflecting effective cost control and operational efficiency. The EBIT and EBITDA margins have also shown positive trends, enhancing profitability. Overall, the company demonstrates solid growth and profitability in its income statement metrics.78
Positive
Balance Sheet
The company maintains a high level of debt, with a debt-to-equity ratio of 4.30 in 2024, indicating significant leverage. However, the return on equity has improved to 35.37%, showing effective use of equity to generate profits. The equity ratio is relatively low at 14.58%, suggesting reliance on debt financing. Overall, while the company is profitable, the high leverage poses a risk that requires careful management.65
Positive
Cash Flow
Operating cash flow has consistently improved, reaching $268 million in 2024, supporting robust free cash flow growth. The free cash flow to net income ratio stands at 0.69, indicating strong cash conversion from earnings. Despite capital expenditures, the company maintains a positive free cash flow, providing flexibility for debt repayment and investment opportunities. The cash flow metrics reflect strong liquidity and a healthy cash position.82
Very Positive
| Breakdown | |||||
| TTM | Dec 2024 | Mar 2024 | Mar 2023 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 3.62B | 3.58B | 3.44B | 3.30B | 2.93B | 1.98B | Gross Profit |
| 1.34B | 2.78B | 1.41B | 1.28B | 1.20B | 746.31M | EBIT |
| 198.92M | 178.32M | 108.57M | 83.69M | 119.97M | 88.88M | EBITDA |
| 282.73M | 282.90M | 202.90M | 174.47M | 208.52M | -255.92M | Net Income Common Stockholders |
| 156.53M | 156.78M | 101.35M | 43.12M | 72.37M | -253.37M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 84.18M | 84.18M | 56.29M | 114.78M | 189.63M | 154.09M | Total Assets |
| 3.04B | 3.04B | 2.84B | 2.78B | 2.80B | 2.75B | Total Debt |
| 1.91B | 1.91B | 1.86B | 1.84B | 1.82B | 1.64B | Net Debt |
| 1.82B | 1.82B | 1.80B | 1.73B | 1.63B | 1.48B | Total Liabilities |
| 2.60B | 2.60B | 2.52B | 2.48B | 2.47B | 2.24B | Stockholders Equity |
| 443.45M | 443.45M | 318.06M | 292.00M | 330.17M | 506.94M |
| Cash Flow | Free Cash Flow | ||||
| 113.76M | 107.96M | 65.18M | 48.78M | 145.46M | -48.01M | Operating Cash Flow |
| 280.50M | 268.32M | 218.40M | 161.93M | 213.01M | 2.91M | Investing Cash Flow |
| -167.09M | -161.10M | -153.50M | -112.81M | -68.61M | -50.91M | Financing Cash Flow |
| -37.81M | -78.79M | -123.53M | -123.64M | -108.83M | 143.69M |
Cheesecake Factory Technical Analysis
Positive
52.35
Price Trends
49.38
Positive
50.26
Positive
46.27
Positive
Market Momentum
1.29
Negative
53.77
Neutral
43.09
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CAKE, the sentiment is Positive. The current price of 52.35 is above the 20-day moving average (MA) of 51.56, above the 50-day MA of 49.38, and above the 200-day MA of 46.27, indicating a bullish trend. The MACD of 1.29 indicates Negative momentum. The RSI at 53.77 is Neutral, neither overbought nor oversold. The STOCH value of 43.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CAKE.
Cheesecake Factory Risk Analysis
Cheesecake Factory disclosed 42 risk factors in its most recent earnings report. Cheesecake Factory reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Cheesecake Factory Peers Comparison
Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $2.59B | 16.43 | 46.60% | 2.06% | 4.42% | 48.23% | |
72 Outperform | $6.67B | 19.85 | 314.08% | ― | 19.80% | 117.96% | |
68 Neutral | $5.00B | 397.22 | 2.70% | ― | 14.07% | -47.47% | |
66 Neutral | $1.25B | 34.91 | 7.80% | 1.83% | 2.26% | -56.99% | |
66 Neutral | $2.21B | 12.27 | 90.40% | 8.61% | 2.18% | -5.15% | |
62 Neutral | $6.88B | 11.26 | 2.78% | 3.93% | 2.65% | -22.00% | |
58 Neutral | $999.07M | 89.27 | 1.86% | ― | 14.43% | -53.71% |
* Consumer Cyclical Sector Average
Performance Comparison
CAKE
Cheesecake Factory
52.35
16.39
45.58%
EAT
Brinker International
149.00
84.66
131.58%
CBRL
Cracker Barrel
55.93
11.23
25.12%
WEN
Wendy's
11.50
-5.26
-31.38%
SHAK
Shake Shack
117.29
21.15
22.00%
FWRG
First Watch Restaurant Group
15.91
-3.34
-17.35%
Cheesecake Factory Earnings Call Summary
Earnings Call Date:Apr 30, 2025
(Q1-2025)
| % Change Since: 4.45%|
Next Earnings Date:Jul 23, 2025
Earnings Call Sentiment Positive
The Cheesecake Factory's earnings call reflected strong financial performance and growth prospects, with significant earnings per share growth, improved margins, and successful new restaurant openings. However, challenges such as a revised revenue outlook, impact from Los Angeles fires on North Italia, and potential tariff impacts were noted. Overall, the positive aspects slightly outweigh the negative, suggesting a cautiously optimistic outlook.Q1-2025 Updates
Positive Updates
Record Earnings Per Share Growth
The Cheesecake Factory reported a 27% year-over-year increase in adjusted earnings per share, marking the sixth consecutive quarter of 20% or higher growth.
Strong Restaurant Performance
The Cheesecake Factory achieved a 1% increase in comparable sales with annualized unit volumes exceeding $12.5 million, highlighting its strong market positioning.
Improved Profit Margins
The Cheesecake Factory's restaurant margins increased to 17.4%, up 140 basis points from the previous year, driven by improved operational execution and labor management.
Successful Restaurant Openings
The company opened eight new restaurants in the first quarter and plans to open up to 25 new restaurants in 2025, reflecting confidence in future growth.
Positive Employee Recognition
The Cheesecake Factory was named to the Fortune Magazine 100 Best Companies to Work For list for the 12th consecutive year, highlighting its strong company culture and employee commitment.
Operational Improvements in North Italia and Flower Child
North Italia and Flower Child reported margin expansions and strong sales performance, with Flower Child achieving a 5% increase in comparable sales.
Negative Updates
Revised Revenue Outlook
The company revised its total revenue outlook to align more closely with the lower end of previous expectations, citing recent economic growth and disposable income forecasts.
Impact of Los Angeles Fires on North Italia
Comparable sales for North Italia declined by 1%, affected by the Los Angeles fires and a smaller comparative base.
Tariff Concerns
Potential impacts from tariffs were noted, although the company plans to absorb these effects without altering net income margin expectations.
Closure of Seattle Location
The Cheesecake Factory announced the closure of a location in Seattle, indicating challenges in specific markets.
Company Guidance
During The Cheesecake Factory's first quarter fiscal 2025 earnings call, the company reported solid financial performance, with revenues nearing the high end of guidance at $927 million and adjusted earnings per share increasing by 27% year-over-year. Comparable sales at The Cheesecake Factory restaurants rose by 1%, with annualized unit volumes exceeding $12.5 million, while restaurant margins improved to 17.4%, a 140 basis point increase from the previous year. The company opened eight new restaurants in the first quarter and plans to open as many as 25 in 2025, including international expansions through licensing agreements. Despite potential economic challenges, the company remains optimistic, emphasizing its commitment to menu innovation, operational excellence, and cultural values. Additionally, The Cheesecake Factory has been recognized on Fortune's 100 Best Companies to Work For list for the 12th consecutive year, highlighting its strong organizational culture and employee commitment.Cheesecake Factory Corporate Events
DividendsBusiness Operations and StrategyFinancial Disclosures
Cheesecake Factory Q1 2025 Financial Results Released
Positive
Apr 30, 2025
On April 30, 2025, The Cheesecake Factory reported its financial results for the first quarter of fiscal 2025, showing a revenue increase to $927.2 million from $891.2 million in the previous year. The company declared a quarterly dividend and announced plans to open up to 25 new restaurants in 2025, reflecting its strong market position and commitment to growth. The company also highlighted its inclusion in Fortune’s ‘100 Best Companies to Work For’ list for the twelfth consecutive year, emphasizing its focus on exceptional hospitality and dining experiences.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.