The Cheesecake Factory posted lower-than-expected second quarter
results and also cut its 2014 earnings guidance for the second time
in a row. Adjusted earnings of $0.59 per share missed the Zacks
Consensus Estimate by 3.2% and were at the lower end of the
company's guidance. However, it increased 9.3% year over year owing
to an increase in revenues. Though revenues of $496.4 million fell
shy of the consensus mark, it increased 5.6% year over year driven
by growth in comps. The company has been reporting positive comps
since the beginning of 2013. Going forward, we expect the company
to remain well positioned with its pricing actions, menu
innovations, and international expansion in regions with potential
for growth. However, continued underperformance of the Grand Lux
Caf , weak consumer spending and food cost inflation remain
headwinds for the company. Moreover, the guidance cut also keeps us
concerned. We maintain our Neutral recommendation on the stock.
Founded in 1972 and based in Calabasas Hills, CA, The Cheesecake
Factory Inc. (CAKE), operates upscale, casual, and full-service
dining restaurants in the United States. The company operates 181
full-service, casual dining restaurants throughout the U.S. and
Puerto Rico, including 169 restaurants under The Cheesecake Factory
brand, 11 restaurants under the Grand Lux Cafe brand and one
restaurant under the RockSugar Pan Asian Kitchen brand.
The company also has two bakery production facilities located in
Calabasas Hills and Rocky Mount, N.C. These produce baked desserts
and other products for its restaurants, as well as for other
foodservice operators, retailers, and distributors.
Currently, the company operates through two segments, The
Cheesecake Factory and Other.
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