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What Awaits Cheesecake Factory (CAKE) this Earnings Season?
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The Cheesecake Factory Inc. (CAKE - Free Report) is scheduled to report first-quarter 2017 numbers on May 3 after market close.
Last quarter, Cheesecake Factory posted in-line earnings. Prior to that, the company posted positive earnings surprise in each of the trailing three quarters, thereby resulting in an average positive surprise of 9.88% in the last four quarters.
The Cheesecake Factory Incorporated Price and EPS Surprise
Let’s see how things are shaping up for this announcement.
Factors Likely to Influence Q1 Results
For the first quarter, Cheesecake Factory expects earnings per share in 71 cents to 74 cents range on the back of expected comps growth in the band of 0-1% at Cheesecake Factory restaurants.
Notably, the company has posted positive comps for 28 consecutive quarters on the back of various sales and digital initiatives. 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.
However, a soft consumer spending environment in the U.S. restaurant space is likely to hurt traffic and in turn comps in the to-be-reported quarter.
Additionally, we believe that Cheesecake Factory’s profits might continue to remain under stress owing to a rising wage rates scenario. Moreover, pre-opening costs of outlets, a little less favorable commodity environment and expenses related to sales initiatives might dent the quarter’s profits.
Earnings Whispers
Our proven model does not conclusively show earnings beat for Cheesecake Factory 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 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 73 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cheesecake Factory holds Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
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 companies in the broader Retail-Wholesale sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Jack in the Box, Inc. (JACK - Free Report) has an Earnings ESP of +4.40% and a Zacks Rank #2.
Wingstop, Inc. (WING - Free Report) has an Earnings ESP of +6.67% and a Zacks Rank #3.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>
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What Awaits Cheesecake Factory (CAKE) this Earnings Season?
The Cheesecake Factory Inc. (CAKE - Free Report) is scheduled to report first-quarter 2017 numbers on May 3 after market close.
Last quarter, Cheesecake Factory posted in-line earnings. Prior to that, the company posted positive earnings surprise in each of the trailing three quarters, thereby resulting in an average positive surprise of 9.88% in the last four quarters.
The Cheesecake Factory Incorporated Price and EPS Surprise
The Cheesecake Factory Incorporated Price and EPS Surprise | The Cheesecake Factory Incorporated Quote
Let’s see how things are shaping up for this announcement.
Factors Likely to Influence Q1 Results
For the first quarter, Cheesecake Factory expects earnings per share in 71 cents to 74 cents range on the back of expected comps growth in the band of 0-1% at Cheesecake Factory restaurants.
Notably, the company has posted positive comps for 28 consecutive quarters on the back of various sales and digital initiatives. 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.
However, a soft consumer spending environment in the U.S. restaurant space is likely to hurt traffic and in turn comps in the to-be-reported quarter.
Additionally, we believe that Cheesecake Factory’s profits might continue to remain under stress owing to a rising wage rates scenario. Moreover, pre-opening costs of outlets, a little less favorable commodity environment and expenses related to sales initiatives might dent the quarter’s profits.
Earnings Whispers
Our proven model does not conclusively show earnings beat for Cheesecake Factory 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 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 73 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cheesecake Factory holds Zacks Rank #3, which increases the predictive power of ESP. However, the company’s 0.00% ESP makes surprise prediction difficult.
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 companies in the broader Retail-Wholesale sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Best Buy Co., Inc. (BBY - Free Report) has an Earnings ESP of +12.50% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Jack in the Box, Inc. (JACK - Free Report) has an Earnings ESP of +4.40% and a Zacks Rank #2.
Wingstop, Inc. (WING - Free Report) has an Earnings ESP of +6.67% and a Zacks Rank #3.
Sell These Stocks. Now.
Just released, today's 220 Zacks Rank #5 Strong Sells demand urgent attention. If any are lurking in your portfolio or Watch List, they should be removed immediately. These are sinister companies because many appear to be sound investments. However, from 1988 through 2016, stocks from our Strong Sell list have actually performed 6X worse than the S&P 500. See today's Zacks "Strong Sells" absolutely free >>