The Cheesecake Factory Incorporated (CAKE): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
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.

Overview:

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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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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