The Cheesecake Factory posted lower-than-expected third-quarter
earnings and also cut its 2014 earnings guidance for the third time
this year. Adjusted earnings of $0.48 per share decreased 7.7% year
over year and missed the Zacks Consensus Estimate by 15.8% owing to
higher total costs and expenses. However, revenues beat the
consensus mark by 0.5%. Higher comps resulted in a 6.3%
year-over-year revenue growth. In fact, 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 and international expansion in regions with growth
potential. However, continued underperformance of the Grand Lux Caf
, weak consumer spending and food cost inflation remain headwinds.
Moreover, the repeated guidance cuts raise concerns. We, thus,
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 186
full-service, casual dining restaurants throughout the U.S. and
Puerto Rico, including 174 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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