A month has gone by since the last earnings report for Cheesecake Factory (CAKE Quick QuoteCAKE - Free Report) . Shares have lost about 11.9% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Cheesecake Factory due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Cheesecake Factory Q1 Earnings Lag Estimates, Revenues Top

Cheesecake Factory 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.

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.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, Cheesecake Factory has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Cheesecake Factory has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.