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Cheesecake Factory (CAKE) Q3 Earnings: What's in Store?
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The Cheesecake Factory Inc. (CAKE - Free Report) is scheduled to report third-quarter 2016 numbers on Oct 26, after market close.
Last quarter, Cheesecake Factory posted an 11.43% positive earnings surprise. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 8.49%.
Let’s see how things are shaping up for this announcement.
Cheesecake Factory has posted positive comps for 26 consecutive quarters on the back of various sales and digital initiatives. Notably, for the third quarter, the company expects earnings per share in the range of 59 cents to 62 cents, on the back of expected comps growth between 0.5% and 1.5% at Cheesecake Factory restaurants.
Menu innovation, increased focus on home and office delivery, the rollout of an improved server training program and the launch of a mobile payment app should thus help in keeping up the trend of positive comps. Meanwhile, efforts to control costs should boost the quarter’s margins.
However, a soft consumer spending environment in the U.S. restaurant space might hurt traffic and comps in the to-be-reported quarter.
Additionally, Cheesecake Factory’s profits might continue to remain under stress owing to a rising wage rates scenario. Moreover, pre-opening costs of outlets and expenses related to sales initiatives might dent the quarter’s profits.
Earnings Whispers
Our proven model does not conclusively show that Cheesecake Factory is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Cheesecake Factory has an earnings ESP of +1.64%. This is because the Most Accurate estimate stands at 62 cents while the Zacks Consensus Estimate is pegged lower at 61 cents.
Zacks Rank: Cheesecake Factory has a Zacks Rank #4 (Sell). Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant companies to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Fogo de Chao, Inc. has an Earnings ESP of +13.33% and a Zacks Rank #3.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an Earnings ESP of +7.69% and a Zacks Rank #3.
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Cheesecake Factory (CAKE) Q3 Earnings: What's in Store?
The Cheesecake Factory Inc. (CAKE - Free Report) is scheduled to report third-quarter 2016 numbers on Oct 26, after market close.
Last quarter, Cheesecake Factory posted an 11.43% positive earnings surprise. Moreover, the company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 8.49%.
Let’s see how things are shaping up for this announcement.
CHEESECAKE FACT Price and EPS Surprise
CHEESECAKE FACT Price and EPS Surprise | CHEESECAKE FACT Quote
Factors Likely to Influence this Quarter
Cheesecake Factory has posted positive comps for 26 consecutive quarters on the back of various sales and digital initiatives. Notably, for the third quarter, the company expects earnings per share in the range of 59 cents to 62 cents, on the back of expected comps growth between 0.5% and 1.5% at Cheesecake Factory restaurants.
Menu innovation, increased focus on home and office delivery, the rollout of an improved server training program and the launch of a mobile payment app should thus help in keeping up the trend of positive comps. Meanwhile, efforts to control costs should boost the quarter’s margins.
However, a soft consumer spending environment in the U.S. restaurant space might hurt traffic and comps in the to-be-reported quarter.
Additionally, Cheesecake Factory’s profits might continue to remain under stress owing to a rising wage rates scenario. Moreover, pre-opening costs of outlets and expenses related to sales initiatives might dent the quarter’s profits.
Earnings Whispers
Our proven model does not conclusively show that Cheesecake Factory is likely to beat the Zacks Consensus Estimate this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Cheesecake Factory has an earnings ESP of +1.64%. This is because the Most Accurate estimate stands at 62 cents while the Zacks Consensus Estimate is pegged lower at 61 cents.
Zacks Rank: Cheesecake Factory has a Zacks Rank #4 (Sell). Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some restaurant companies to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:
The Wendy's Company (WEN - Free Report) has an Earnings ESP of +10.00% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Fogo de Chao, Inc. has an Earnings ESP of +13.33% and a Zacks Rank #3.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) has an Earnings ESP of +7.69% and a Zacks Rank #3.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>