Company Overview - Cheesecake Factory (CAKE) is expected to report a year-over-year increase in earnings, with a projected EPS of $1, reflecting a change of +13.6% [2] - Revenues are anticipated to reach $907.33 million, representing a 4.8% increase from the previous year [2] Earnings Estimates and Trends - The consensus EPS estimate has remained unchanged over the last 30 days, indicating stability in analyst expectations [2] - The Most Accurate Estimate for Cheesecake Factory is lower than the Zacks Consensus Estimate, resulting in an Earnings ESP of -0.59%, suggesting a bearish outlook from analysts [4][6] Earnings Surprise History - In the last reported quarter, Cheesecake Factory exceeded expectations by posting earnings of $0.73 per share against an expected $0.63, achieving a surprise of +15.87% [7] - Over the past four quarters, the company has beaten consensus EPS estimates three times [7] Industry Context - In comparison, Starbucks (SBUX) is expected to report earnings of $0.93 per share for the same quarter, indicating a year-over-year decline of -7% [9] - Starbucks has an Earnings ESP of 0.12%, suggesting a likelihood of beating the consensus EPS estimate, despite a recent downward revision of 1% in its EPS estimate [9]

Industry Overview - The U.S. restaurant industry demonstrated resilience in 2023 despite challenges such as rising food costs, inflation, and higher wages [1] - Inflation, which had declined sharply in 2023, began to rise again in early 2024, impacting sales and traffic [1] - Restaurant sales increased by 0.3% sequentially and 4.4% year-over-year, driven by solid consumer spending and rising personal income [1] Challenges and Strategies - Restaurant owners are focusing on digital innovations, sales-boosting strategies, and cost-cutting measures to overcome current challenges [2] - Major restaurant chains are partnering with delivery services and digital platforms to enhance sales [2] - The industry anticipates benefits from the Federal Reserve's planned 25 basis point rate cut, which is lower than previously projected cuts [2] Interest Rate Projections - The latest FOMC "dot plot" indicates a potential total reduction of 1% in interest rates by 2025, possibly lowering the Fed funds rate to 4.1% by the end of next year [3] - Lower interest rates are expected to ease food costs, positively impacting the restaurant industry [3] Investment Opportunities - Investment in restaurant stocks is recommended, with a focus on four companies: The Cheesecake Factory Incorporated (CAKE), Brinker International, Inc. (EAT), Wingstop Inc. (WING), and Texas Roadhouse, Inc. (TXRH) [4] - These stocks have shown positive earnings estimate revisions in the last 60 days and carry Zacks Rank 1 (Strong Buy) or 2 (Buy) [4] Company Highlights - **The Cheesecake Factory Incorporated (CAKE)**: Expected earnings growth rate of 17.8% for the current year, with a Zacks Consensus Estimate improvement of 1.3% over the past 60 days [5] - **Brinker International, Inc. (EAT)**: Expected earnings growth rate of 45.2% for the current year, with a Zacks Consensus Estimate improvement of 4.3% over the past 60 days [5] - **Wingstop Inc. (WING)**: Expected earnings growth rate of 39.5% for the current year, with a Zacks Consensus Estimate improvement of 2.1% over the past 60 days [7] - **Texas Roadhouse, Inc. (TXRH)**: Expected earnings growth rate of 33.3% for the current year, with a Zacks Consensus Estimate improvement of 1.5% over the past 60 days [7]

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Group 1 - Cheesecake Factory (CAKE) has a year-to-date return of approximately 13.8%, outperforming the average gain of 13.7% in the Retail-Wholesale sector [2] - The Zacks Consensus Estimate for CAKE's full-year earnings has increased by 3%, indicating improved analyst sentiment and earnings outlook [2] - Cheesecake Factory is ranked 2 (Buy) in the Zacks Rank system, which emphasizes earnings estimates and revisions [1][2] Group 2 - Cheesecake Factory is part of the Retail - Restaurants industry, which consists of 43 companies and currently ranks 167 in the Zacks Industry Rank [3] - The Retail - Restaurants industry has seen an average loss of 6.7% this year, highlighting Cheesecake Factory's better performance in year-to-date returns [3] - Another outperforming stock in the Retail-Wholesale sector is Torrid Holdings (CURV), which has returned 49.1% year-to-date and has a Zacks Rank 2 (Buy) [2][3]

Core Viewpoint - Momentum investing focuses on "buying high and selling higher," contrasting with traditional strategies of "buying low and selling high" [1] Group 1: Momentum Investing Strategy - Momentum investing can be risky as stocks may lose momentum if future growth does not justify high valuations [1] - Identifying the right entry point for fast-moving stocks is challenging [1] Group 2: Cheesecake Factory (CAKE) Analysis - CAKE has shown a four-week price change of 0.7%, indicating growing investor interest [2] - Over the past 12 weeks, CAKE's stock gained 12.9%, demonstrating its ability to deliver positive returns over a longer timeframe [3] - CAKE has a beta of 1.51, suggesting it moves 51% more than the market in either direction [3] - CAKE holds a Momentum Score of B, indicating a favorable time to invest [3] Group 3: Earnings Estimates and Valuation - CAKE has a Zacks Rank 2 (Buy) due to upward revisions in earnings estimates, which attract more investors [4] - The stock is trading at a Price-to-Sales ratio of 0.59, suggesting it is undervalued as investors pay only 59 cents for each dollar of sales [4] - CAKE is positioned for significant growth potential while maintaining a reasonable valuation [5]

Core Viewpoint - The Cheesecake Factory is set to report Q2 results on July 31, with analysts expecting a sequential improvement in growth from Q1, despite a challenging industry backdrop [1][11]. Company Performance - Q1 results showed a revenue growth of 2.9%, with comparable restaurant sales declining by 0.6%, outperforming some competitors [6][7]. - The normalized EPS for Q1 was $0.73, beating estimates by $0.09, supported by a 1.0 percentage point improvement in gross margin [7]. - For Q2, revenues are estimated to grow by 5.0% year-over-year to $909.4 million, with normalized EPS expected to rise to $0.99 [2][11]. Industry Trends - The industry is experiencing a cautious optimism, with some companies like Shake Shack and Red Robin reporting increased traffic in April and May [3]. - However, consumer sentiment has worsened in June, leading to a more cautious outlook for the quarter [5][11]. - Wall Street anticipates a comparable restaurant growth of 1.5% for CAKE in Q2, higher than the consensus estimate of 1.0% [2]. Valuation Insights - The fair value estimate for CAKE has increased to $39.49, reflecting improved margin expectations and a lower cost of capital [9]. - The company's EBIT margin is projected to be 4.7% in 2024 and 5.1% thereafter, indicating a positive outlook for profitability [8].

Core Insights - The restaurant sector continues to see strong consumer spending, averaging between $94-95 billion monthly, despite rising food prices [1] - Companies like McDonald's and Wendy's are introducing "value" meals in response to consumer price sensitivity, while others maintain pricing power due to diversification [1] Company Summaries Yum! Brands (YUM) - Yum! Brands operates a diversified portfolio including KFC, Taco Bell, and Pizza Hut, contributing to its strong market position [2] - EPS predictions have decreased from 5.79 to 5.67, but analysts forecast an annual growth rate of 11.10% over the next five years [2] - The company reported significant growth in specific regions, with KFC seeing 22% growth in Latin America and 12% in India in Q1 2024 [3] Texas Roadhouse (TXRH) - Texas Roadhouse is a casual dining chain with strong financial metrics, including profit margins and return on assets above sector averages [5] - The company experienced a quarterly revenue growth of 12.50% and earnings growth of 31% in Q1 2024 [5] - Despite risks from high beef prices, TXRH is positioned to attract consumers from higher-priced restaurants, supported by positive market sentiment [6] The Cheesecake Factory (CAKE) - The Cheesecake Factory operates primarily in North America and has a strong return on equity of 33.69%, indicating effective shareholder value growth [7] - The company achieved a year-over-year revenue growth of 2.9% and an 18.3% increase in earnings, exceeding analyst expectations [8] - Analysts predict a 15.25% annual growth in EPS over the next five years, making CAKE a compelling long-term investment [8]

Investors interested in stocks from the Retail - Restaurants sector have probably already heard of Cheesecake Factory (CAKE) and Shake Shack (SHAK) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style ...

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fun ...

The Cheesecake Factory Incorporated (CAKE) is seeing positive effects from increased consumer demand, the opening of new restaurants and the strong performance of its Flower Child brand, along with improved operational efficiency. As a result, the company’s shares have risen by 14.3% in the past six months, in contrast to a 19.8% decline in the industry. Challenges like an uncertain macroeconomic climate and inflationary pressures are potential obstacles.This Zacks Rank #3 (Hold) company’s earnings and sale ...