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Cheesecake Factory (CAKE) Q1 Earnings Lag Estimates, Rise Y/Y

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The Cheesecake Factory Incorporated (CAKE - Free Report) reported mixed first-quarter fiscal 2022 results, with earnings missing the Zacks Consensus Estimate and revenues beating the same. The top and the bottom line increased on a year-over-year basis.

David Overton, chairman and CEO of Cheesecake Factory, stated, “Our sales trends across our brands continued to be strong during the first quarter, and this trend has sustained into the second quarter to date. Our restaurants remain competitively well positioned and we are clearly capturing market share as evidenced by our continued outperformance of the broader casual dining industry.”

Earnings & Revenue Discussion

In the quarter under review, adjusted earnings per share (EPS) came in at 47 cents missing the Zacks Consensus Estimate of 50 cents. In the prior-year quarter, the company had reported an adjusted EPS of 20 cents.

 

During the fiscal first quarter, total revenues of $793.7 million beat the Zacks Consensus Estimate of $782 million by 1.5%. The top line surged 26.5% on a year-over-year basis. The upside can be primarily attributed to solid off-premise sales growth.

During the reported quarter, comps at Cheesecake Factory restaurants increased 20.7% year over year. In the prior-year quarter, comps had increased 2.8% year over year.

Costs in Detail

Cost of sales, as a percentage of revenues, increased 200 basis points (bps) year over year to 23.7% in the fiscal first quarter. Labor expenses, as a percentage of total revenues, amounted to 37.3%, up 70 bps from the year-ago quarter’s levels. Other operating costs (as a percentage of total revenues) came in at 26.2%, down 270 bps from the prior-year quarter’s levels.

General and administrative (G&A) expenses accounted for 6.2% of revenues compared with 7.1% in the prior-year quarter. In the fiscal first quarter, pre-opening expenses accounted for 0.2% of revenues, down 40 bps year over year.

Balance Sheet

As of Mar 29, 2022, Cheesecake Factory’s cash and cash equivalents totaled $183.6 million compared with $189.6 million as of Dec 28, 2021. During the fiscal first quarter, long-term debt (net of issuance costs) came in at $466.5 million compared with $466 million as of Dec 28, 2021.

The company declared a quarterly cash dividend of 27 cents per share. The dividend will be payable May 24, 2022, to its shareholders of record as of May 11, 2022. Also, CAKE reinstated its stock repurchase program.

Store Developments

At the fiscal first quarter-end, the company opened a Flower Child location in Fort Worth.

In fiscal 2022, the company anticipates opening 15-16 new restaurants comprising four Cheesecake Factory restaurants, four to five North Italia restaurants and seven FRC restaurants (including three to four Flower Child locations). Internationally, the company intends to open one Cheesecake Factory restaurant under a licensing agreement.

Other Business Updates

From the start of the fiscal second quarter to Apr 26, 2022, comps at Cheesecake Factory (across all operating models) increased approximately 8.2% year over year. Solid off-premise sales were a primary contributor to the company’s performance. Quarter-to-date (through Apr 26, 2022), the off-premise model contributed 25% to total sales.

Zacks Rank & Key Picks

Cheesecake Factory currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.

Some better-ranked stocks in the same space are BBQ Holdings, Inc. , Dave & Buster's Entertainment, Inc. (PLAY - Free Report) and Arcos Dorados Holdings Inc. (ARCO - Free Report) .

BBQ Holdings sports a Zacks Rank #1. BBQ Holdings has a long-term earnings growth of 14%. Shares of the company have increased 6.4% in the past year.

The Zacks Consensus Estimate for BBQ Holdings’ 2022 sales and EPS suggests growth of 40.9% and 66.2%, respectively, from the year-ago period’s levels.

Dave & Buster's sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 212%, on average. Shares of the company have declined 1.2% in the past year.

The Zacks Consensus Estimate for Dave & Buster's current-year sales and EPS suggests growth of 27.2% and 51.1%, respectively, from the year-ago period’s levels.

Arcos Dorados sports a Zacks Rank #1. Arcos Dorados has a long-term earnings growth of 31.3%. Shares of the company have risen 38.6% in the past year.

The Zacks Consensus Estimate for Arcos Dorados’ 2022 sales and EPS suggests growth of 16.6% and 66.7%, respectively, from the year-ago period’s levels.

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