Yahoo Finance Why Is Cheesecake Factory (CAKE) Up 8.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Cheesecake Factory (CAKE). Shares have added about 8.9% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Cheesecake Factory due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Cheesecake Factory Q1 Earnings Beat Estimates, Rise Y/Y
Cheesecake Factory reported impressive first-quarter fiscal 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased from the prior-year quarter’s figure.
Earnings & Revenue Discussion
In the quarter under review, the company reported adjusted earnings per share (EPS) of 73 cents, beating the Zacks Consensus Estimate of 63 cents by 15.9%. In the year-ago period, the company reported adjusted EPS of 61 cents.
Quarterly revenues of $891.2 million beat the consensus estimate of $888 million by 0.3%. The top line increased 2.9% on a year-over-year basis. The upside was backed by strong consumer demand and traffic.
Q1 Comps
In the reported quarter, comps at Cheesecake Factory restaurants dropped 0.6% year over year against growth of 5.7% reported in the prior-year quarter. We projected comps to decline 0.4% year over year.
North Italia comps rose 3% year over year compared with 9% growth reported in the year-ago quarter. Our model suggested the metric to rise 0.7% year over year.
Costs in Detail
The cost of food and beverage, as a percentage of revenues, declined 100 basis points (bps) year over year to 22.8% in the fiscal first quarter.
Labor expenses, as a percentage of total revenues, amounted to 36%, flat year over year. We expected the metric to be 36.2% of revenues in the quarter.
Other operating costs, as a percentage of total revenues, were 26.3%, down 40 bps from the prior-year quarter’s level. In the quarter, we anticipated the metric to be 26.8% of revenues.
General and administrative expenses accounted for 6.8% of revenues, up 60 bps year over year. Our model predicted the metric to be 6.4% of revenues in the fiscal first quarter.
In the fiscal first quarter, pre-opening expenses accounted for 0.6% of revenues, up 30 bps year over year.
Balance Sheet
As of Apr 2, 2024, Cheesecake Factory’s cash and cash equivalents totaled $60.2 million compared with $56.3 million as of Jan 2, 2024. Long-term debt (net of issuance costs) was $470.6 million compared with $470 million in the prior quarter. As of Apr 2, the company had a total available liquidity of $296.7 million.
Management declared a quarterly cash dividend of 27 cents per share. The dividend will be payable on Jun 4 to shareholders of record as of May 22, 2024. In the fiscal first quarter, CAKE repurchased approximately 359,400 shares for $12.5 million.
Store Developments
In the quarter under review, Cheesecake Factory opened five new restaurants. The openings included two North Italia restaurants, two FRC restaurants and one Flower Child location. Internationally, the company opened a Cheesecake Factory restaurant under licensing agreements in Mexico. Subsequent to the quarter-end, the company opened one Cheesecake Factory restaurant internationally under a licensing agreement in Asia.
In the fiscal 2024, the management expects to open 22 new restaurants. This includes three to four Cheesecake factories, six to seven North Italia's, six to seven Flower Child and six to seven FRC restaurants.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
VGM Scores
At this time, Cheesecake Factory has a strong Growth Score of A, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Cheesecake Factory has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Cheesecake Factory belongs to the Zacks Retail - Restaurants industry. Another stock from the same industry, BJ's Restaurants (BJRI), has gained 5.3% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
BJ's Restaurants reported revenues of $337.33 million in the last reported quarter, representing a year-over-year change of -1.2%. EPS of $0.32 for the same period compares with $0.15 a year ago.
For the current quarter, BJ's Restaurants is expected to post earnings of $0.49 per share, indicating a change of -2% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.3% over the last 30 days.
BJ's Restaurants has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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The Cheesecake Factory Incorporated (CAKE) : Free Stock Analysis Report
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