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Cheesecake Factory (CAKE)
NASDAQ:CAKE
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Cheesecake Factory
(NASDAQ:CAKE)
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Rating:66Neutral
Price Target:
$63.00
▲(0.93% Upside)
The Cheesecake Factory's stock score is driven by strong financial performance and positive earnings call highlights, tempered by high leverage and technical indicators suggesting potential bearish momentum. The valuation is reasonable, offering a balanced risk-reward profile.
Positive Factors
Revenue Growth Recovery
A 13.8% TTM revenue increase indicates the business is regaining demand and scaling core restaurant sales. Sustained top-line growth supports margin leverage, funds reinvestment in operations and menu innovation, and underpins medium-term cash generation and expansion plans.
Free Cash Flow Strength
Robust 21.3% free cash flow growth and near 0.5 FCF-to-net-income ratio enhance financial flexibility. Durable cash generation supports unit development, shareholder returns and debt servicing ability, mitigating some risks from cyclical demand swings over the next several quarters.
Unit Expansion Pipeline
Accelerating unit growth (19 opened YTD with plans for ~25–26 new restaurants) provides structural revenue and scale opportunities. New locations diversify geographic exposure, raise brand reach, and offer long-term operating leverage if newer concepts sustain AUVs and margins.
Negative Factors
High Leverage
A 5.03 TTM debt-to-equity ratio signals heavy reliance on debt financing. High leverage increases interest and refinancing risk, constrains capital allocation flexibility for growth or buybacks, and leaves the company more exposed to cash-flow volatility during prolonged consumer softness.
Soft Consumer Traffic
Persistently lower traffic in full-service dining reduces revenue visibility and pressures restaurant-level margins. Over 2–6 months this can slow unit payback, limit free cash flow upside, and challenge margin recovery despite cost efficiencies, especially if macro uncertainty persists.
North Italia Underperformance
A 3% comparable sales decline at North Italia highlights concept-level vulnerability and potential cannibalization from new openings. Underperforming concepts can drag consolidated margins and returns on incremental unit investment, complicating portfolio optimization and growth assumptions.
Cheesecake Factory (CAKE) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$3.19B
Dividend Yield2.11%
Average Volume (3M)1.29M
Price to Earnings (P/E)20.9
Beta (1Y)0.89
Revenue Growth4.90%
EPS Growth27.14%
CountryUS
Employees47,900
SectorConsumer Cyclical
Sector Strength84
IndustryRestaurants
Share Statistics
EPS (TTM)1.00
Shares Outstanding49,841,690
10 Day Avg. Volume1,513,463
30 Day Avg. Volume1,285,446
Financial Highlights & Ratios
PEG Ratio0.26
Price to Book (P/B)5.11
Price to Sales (P/S)0.63
P/FCF Ratio21.00
Enterprise Value/Market Cap0.92
Enterprise Value/Revenue0.79
Enterprise Value/Gross Profit1.14
Enterprise Value/Ebitda10.13
Forecast
1Y Price Target
$62.69Price Target Upside0.43% Upside
Rating ConsensusHold
Number of Analyst Covering15
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Cheesecake Factory Business Overview & Revenue Model
Company DescriptionThe Cheesecake Factory Incorporated operates restaurants. It operates two bakeries that produces cheesecakes and other baked products for its restaurants, international licensees, third-party bakery customers, external foodservice operators, retailers, and distributors. The company owns and operates 306 restaurants throughout the United States and Canada under brands, including 208 The Cheesecake Factory and 29 North Italia; and a collection of Fox Restaurant Concepts, as well as 29 The Cheesecake Factory restaurants under licensing agreements internationally. The Cheesecake Factory Incorporated was founded in 1972 and is headquartered in Calabasas, California.
How the Company Makes MoneyThe Cheesecake Factory generates revenue primarily through its restaurant operations, which include dine-in, takeout, and delivery services. The company earns money from customers who visit its locations and order food and beverages, with a significant focus on its signature cheesecakes and desserts, which are high-margin items. Additionally, the company's bakery division contributes to its revenue by supplying cakes and desserts to various retail outlets. Key revenue streams include food sales, beverage sales, and a growing segment of off-premise dining options. The Cheesecake Factory also benefits from its loyalty program and partnerships with delivery services, which help increase customer engagement and drive sales. Seasonal promotions and limited-time menu items further enhance revenue opportunities by encouraging repeat visits and attracting new customers.
Cheesecake Factory Earnings Call Summary
Earnings Call Date:Feb 18, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 13, 2026
Earnings Call Sentiment Positive
The call presented a generally positive picture: record annual results (revenues, adjusted EBITDA, EPS) alongside strong concept-level performance (notably Flower Child and FRC), continued unit growth, healthy liquidity and expanded shareholder returns. Offsetting risks included comparable sales declines at the core Cheesecake Factory and North Italia, mix headwinds from new lower-price menu items, one-time impairment and gift card-related charges, weather disruptions and a near-term debt maturity. Management provided constructive 2026 development and financial assumptions and indicated confidence in operational execution and digital investments.Q4-2025 Updates
Positive Updates
Record Annual Financial Performance
Fiscal 2025 total revenues of $3.75 billion, up 5% year-over-year; adjusted diluted EPS increased 10% to $3.77; record adjusted EBITDA of $354 million.
Solid Q4 Revenue and EPS
Q4 total revenues of $961.6 million (including $17.3M gift card breakage) and adjusted diluted EPS of $1.00, with adjusted net income margin of 5.1%, finishing toward the higher end of expectations.
Improving Restaurant-Level Margins
Adjusted restaurant-level profit margin at The Cheesecake Factory increased 60 bps year-over-year to 17.6%; mature North Italia and Flower Child recorded ~17.5% restaurant margins in Q4, with Flower Child full-year mature margin at 18.5%.
Unit Growth and Development Momentum
Opened 25 new restaurants in 2025 (~7% unit growth); Q4 opened 7 restaurants; company expects to open up to 26 restaurants in 2026 (including 6 Cheesecake Factory, 6–7 North Italia, 6–7 Flower Child, 7 FRC).
Strong Brand & Concept Performance — Flower Child and FRC
Flower Child Q4 comparable sales +4% (2-year comp +15%) with Q4 annualized AUV $4.3M and FY AUV $4.6M; Other FRC sales up 17% year-over-year and FRC new openings showing >$8.7M annualized AUV.
Off-Premise and AUVs
Adjusted annualized AUVs: Cheesecake $12.2M Q4; North Italia $7.6M Q4 (some newly opened North Italia averaged >$9M); off-premise mix improved to 22% of sales and delivery represents ~10% of total sales.
Capital Allocation & Liquidity Strength
Returned >$206M to shareholders in 2025 (Q4 returned $24M via $11.2M buybacks and $12.8M dividends); increased repurchase authorization and raised quarterly dividend; ending liquidity ~$582.2M (cash $215.7M, revolver availability ~$366.5M).
Loyalty & Digital Investments
Meaningful progress in Cheesecake Rewards membership and engagement; dedicated rewards app planned for Q2 to deepen engagement and digital capabilities.
Negative Updates
Comparable Sales Pressure at Core Brand
The Cheesecake Factory comparable sales declined 2.2% in Q4 (down from +0.3% in Q3), reflecting continued traffic/mix pressure versus last year.
North Italia Sales Weakness and Cannibalization
North Italia comparable sales declined 4% in Q4; traffic -6%, price +4%, mix -2%; company cited sales transfer from recently opened restaurants and lingering local impacts (Los Angeles fires).
Menu Mix Headwinds from Bites & Bowls
New lower-price 'bites and bowls' drove negative mix (~-1.8% mix in Q4) and are expected to exert roughly a -1% annual mix headwind in modeling for 2026 despite higher attachment rates and traffic gains.
One-Time and Non-Cash Charges
Recorded pretax net expense of $24.6 million in Q4 related to impairment of assets, lease termination expenses, FRC acquisition-related items, gift card breakage and gift card inventory adjustments; G&A increased ~70 bps due primarily to a gift card inventory write-down.
Restaurant Closures and Near-Term Debt Maturity
Closed 4 restaurants subsequent to quarter end (2 Cheesecake, 1 Grand Lux Cafe, 1 FRC); total principal debt outstanding ~$644M including $69M of convertible notes due June 2026 (near-term maturity to monitor).
Industry Weakness & Weather Impact
Industry casual dining trends decelerated (Black Box index down ~410 bps sequentially from Q3); weather-driven disruption is estimated to be ~-1% net to Q1 results with significant temporary restaurant closures at peak days.
Modest Mix-Driven Margin Pressure
Q4 mix was negative and pricing/other offsets were needed (Cheesecake Q4 pricing ~3.5–4%); company plans to moderate pricing to ~3% in 2026 which, combined with mix, implies modest margin trade-offs while pursuing traffic.
Company Guidance
The company provided Q1 2026 assumptions of total revenues of $955M–$970M (including an estimated ~1% net weather drag and four early‑Q1 restaurant closures), effective commodity inflation in the low single digits, net total labor inflation in the low‑ to mid‑single digits, G&A of ~$63M–$64M, depreciation of ~$28M, preopening expense of ~$4M–$5M, adjusted net income margin of about 5% at the midpoint, a modeled tax rate of ~5%–6% and weighted average shares of ~48.5M. For fiscal 2026 the company is modeling approximately $3.9B of total revenues (±1%), total inflation (commodity, labor and other) in the low‑ to mid‑single‑digit range, G&A of ~6.5% of sales, depreciation of ~$115M, preopening of ~$35M–$36M, a full‑year net income margin around 5%, a ~10% tax rate and roughly flat shares, with up to 26 new restaurant openings (~6 Cheesecake Factory, 6–7 North Italia, 6–7 Flower Child and 7 FRC) (≈75% of openings expected in H2) and about $210M of cash CapEx planned.Cheesecake Factory Financial Statement Overview
Summary
The Cheesecake Factory shows strong revenue growth and profitability with improving margins and cash flow. However, the high debt-to-equity ratio indicates significant leverage, posing a risk to financial health.Income Statement
The Cheesecake Factory shows a strong recovery with consistent revenue growth, evidenced by a 13.8% increase in TTM. Gross profit margins are healthy at 69.6% TTM, although slightly down from 77.5% in 2024. Net profit margins remain stable around 4.3% TTM, indicating profitability. EBIT and EBITDA margins are improving, reflecting operational efficiency.75
Positive
Balance Sheet
The company has a high debt-to-equity ratio of 5.03 TTM, indicating significant leverage, which poses a risk. However, the return on equity is strong at 39.97% TTM, showing effective use of equity. The equity ratio is low, suggesting reliance on debt financing.60
Neutral
Cash Flow
Free cash flow growth is robust at 21.3% TTM, signaling improved cash generation. The operating cash flow to net income ratio is moderate at 0.42, indicating decent cash conversion. The free cash flow to net income ratio is nearly 0.50, showing a good balance between cash flow and profitability.70
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 3.71B | 3.58B | 3.44B | 3.30B | 2.93B | 1.98B |
| Gross Profit | 2.58B | 2.78B | 1.41B | 1.28B | 1.20B | 746.31M |
| EBITDA | 291.25M | 282.90M | 201.70M | 132.76M | 171.97M | -255.92M |
| Net Income | 160.81M | 156.78M | 101.35M | 43.12M | 72.37M | -253.37M |
Balance Sheet | ||||||
| Total Assets | 3.24B | 3.04B | 2.84B | 2.78B | 2.80B | 2.75B |
| Cash, Cash Equivalents and Short-Term Investments | 189.98M | 84.18M | 56.29M | 114.78M | 189.63M | 154.09M |
| Total Debt | 2.14B | 1.91B | 1.86B | 1.84B | 1.82B | 1.64B |
| Total Liabilities | 2.82B | 2.60B | 2.52B | 2.48B | 2.47B | 2.24B |
| Stockholders Equity | 425.35M | 443.45M | 318.06M | 292.00M | 330.17M | 506.94M |
Cash Flow | ||||||
| Free Cash Flow | 158.89M | 107.96M | 65.18M | 48.78M | 145.46M | -48.01M |
| Operating Cash Flow | 320.38M | 268.32M | 218.40M | 161.93M | 213.01M | 2.91M |
| Investing Cash Flow | -162.02M | -161.10M | -153.50M | -112.81M | -68.61M | -50.91M |
| Financing Cash Flow | -20.35M | -78.79M | -123.53M | -123.64M | -108.83M | 143.69M |
Cheesecake Factory Technical Analysis
Positive
62.42
Price Trends
56.21
Positive
53.22
Positive
56.04
Positive
Market Momentum
1.63
Positive
58.27
Neutral
69.15
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 62.42 is above the 20-day moving average (MA) of 60.25, above the 50-day MA of 56.21, and above the 200-day MA of 56.04, indicating a bullish trend. The MACD of 1.63 indicates Positive momentum. The RSI at 58.27 is Neutral, neither overbought nor oversold. The STOCH value of 69.15 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
71 Outperform | $1.78B | 7.26 | 39.04% | 3.27% | 1.21% | 67.88% | |
68 Neutral | $6.89B | 15.21 | 177.80% | ― | 23.18% | 138.17% | |
66 Neutral | $3.19B | 20.94 | ― | 2.11% | 4.90% | 27.14% | |
62 Neutral | $4.02B | 91.53 | 8.83% | ― | 13.49% | 402.23% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
57 Neutral | $1.08B | 28.95 | ― | 4.72% | -0.64% | -60.71% | |
45 Neutral | $735.71M | 44.31 | 3.89% | 3.54% | -1.61% | -58.09% |
* Consumer Cyclical Sector Average
CAKE
Cheesecake Factory
62.42
8.88
16.59%
ARCO
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8.88
0.78
9.59%
EAT
Brinker International
150.61
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3.96%
CBRL
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32.83
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-28.50%
PZZA
Papa John's International
32.58
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SHAK
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93.18
-15.54
-14.29%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.