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 ...

Core Viewpoint - The Cheesecake Factory Incorporated (CAKE) is experiencing positive growth driven by increased consumer demand, new restaurant openings, and strong performance from its Flower Child brand, resulting in a 14.3% rise in shares over the past six months, contrasting with a 19.8% decline in the industry [1] Growth Catalysts - Strong demand is evident, with comparable sales and demand trends improving at new Flower Child locations in the fiscal first quarter of 2024 [2] - Operational and supply chain improvements have been implemented over the past 18 months, enhancing guest experience and driving cost efficiencies, including a new kitchen display system and a robust loyalty platform [2] - Flower Child sales increased by 10.2% year over year to $34.5 million, with sales per restaurant operating week rising to $83,673 from $80,282 in the prior year [3] - Off-premise sales contributed approximately 22% of total restaurant sales in the first quarter of fiscal 2024, with ongoing improvements in delivery channels and technology upgrades to enhance consumer convenience [3] Development Plans - The company opened five new restaurants in the first quarter of fiscal 2024, including locations for North Italia, FRC, and Flower Child, and has plans to open 22 new restaurants in fiscal 2024 [4] - Capital expenditures are allocated between $180 million and $200 million to support new unit development and restaurant maintenance, aiming for a long-term unit growth target of 7% [4] Concerns - Ongoing macroeconomic challenges are affecting operations, leading to changes in consumer behavior, supply chain disruptions, and increases in commodity and wage inflation [5] - Delays in opening new restaurants have been attributed to permitting issues, landlord readiness, and supply chain challenges, with the company remaining cautious about the uncertain macroeconomic environment [5]

For new and old investors, taking full advantage of the stock market and investing with confidence are common goals. Zacks Premium provides lots of different ways to do both.The popular research service can help you become a smarter, more self-assured investor, giving you access to daily updates of the Zacks Rank and Zacks Industry Rank, the Zacks #1 Rank List, Equity Research reports, and Premium stock screens.Zacks Premium also includes the Zacks Style Scores.What are the Zacks Style Scores?Developed alon ...

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 Est ...

Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.Featuring daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, the research service can help you become a smarter, more self-assured investor.Zacks Premium includes access to the Zacks Style Scores as well.What are the Zacks Style Scores?The Zac ...

The Cheesecake Factory Incorporated (CAKE) is likely to benefit from strong Flower Child performance, its rewards program and unit-expansion efforts. This and the focus on FRC concepts and emerging brands bode well. However, labor and commodity inflation is a concern.Let us discuss the factors that highlight why investors should retain the stock for now.Factors Driving GrowthCheesecake Factory focuses on Flower Child restaurants to drive growth. In the fiscal first quarter, the company reported strong compa ...