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Cheesecake Factory (CAKE) Up 3.7% Since Earnings Report
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It has been about a month since the last earnings report for The Cheesecake Factory Incorporated (CAKE - Free Report) . Shares have added about 3.7% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is CAKE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Cheesecake Factory Q4 Earnings in Line With Estimates
Cheesecake Factory’s fourth-quarter 2017 earnings met analysts’ expectations, while revenues surpassed the same. A challenging operating environment in the U.S. restaurants space has been affecting the company’s performance.
Earnings and Revenue Discussion
Adjusted earnings of 53 cents per share were in line with the Zacks Consensus Estimate. However, earnings declined 20.9% year over year.
Sales of $571.8 million surpassed the Zacks Consensus Estimate of $566.6 million by 0.9% but fell 5.2% year over year.
Inside the Headlines
Comps at Cheesecake Factory restaurants declined 0.9%, whereas the year-ago quarter marked a 1.1% growth in comps and the preceding quarter marked a 2.3% decline. Pricing was up 2.5%, traffic was down 2.8% and mix was a negative 0.4%.
Cost of sales ratio increased 20 basis points (bps) year over year to 23.4%. Meanwhile, labor expense ratio was 34.5%, up 90 bps year over year. This was primarily driven by higher hourly wage rates and some deleverage.
General and administrative expenses accounted for 6.1% of revenues in fourth-quarter fiscal 2017, up 80 bps from the prior-year quarter. The upside can be attributed to lower bonus accrual and lower stock-based compensation expense, partially offset by higher legal costs. Notably, pre-opening expenses were roughly $7.6 million, up from $7 million in the year-ago quarter.
Fiscal 2017 Highlights
Sales of $2.26 billion deteriorated 0.5% year over year. Adjusted earnings of $2.60 per share declined 8.1% year over year.
Balance Sheet
As of Jan 2, 2018, cash and cash equivalents amounted to $6 million, compared with $53.8 million as of Jan 3, 2017.
Management announced a cash dividend of 29 cents per share of common stock. The dividend will be payable on Mar 20, 2018 to the stockholders of record at the close of business on Feb 28, 2018.
During the fourth quarter of fiscal 2017, Cheesecake Factory repurchased approximately 0.4 million shares of its common stock at a cost of $16.6 million. In fiscal 2017, the company repurchased a total of 2.6 million shares of its common stock worth $123.0 million.
First-Quarter Fiscal 2018 Outlook
For the upcoming quarter, adjusted earnings per share are estimated in the range of 66-70 cents based on an anticipated comps outlook in the range of 0.5-1.5% at Cheesecake Factory restaurants.
The company projects corporate tax rate for the first quarter to be approximately 13%.
Fiscal 2018 Guidance
The company expects earnings in the range of $2.64-$2.80. The Zacks Consensus Estimate for fiscal 2018 earnings is pegged at $2.60.
Meanwhile, the company continues to expect comps of flat to up 1%.
Capital expenditures for the year are now projected in the range of $90-$105 million.
Additionally, Cheesecake Factory continues to expect to open four to six company-owned restaurants in fiscal 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter compared to three lower.
The Cheesecake Factory Incorporated Price and Consensus
At this time, CAKE has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Interestingly, CAKE has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Cheesecake Factory (CAKE) Up 3.7% Since Earnings Report
It has been about a month since the last earnings report for The Cheesecake Factory Incorporated (CAKE - Free Report) . Shares have added about 3.7% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is CAKE due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Cheesecake Factory Q4 Earnings in Line With Estimates
Cheesecake Factory’s fourth-quarter 2017 earnings met analysts’ expectations, while revenues surpassed the same. A challenging operating environment in the U.S. restaurants space has been affecting the company’s performance.
Earnings and Revenue Discussion
Adjusted earnings of 53 cents per share were in line with the Zacks Consensus Estimate. However, earnings declined 20.9% year over year.
Sales of $571.8 million surpassed the Zacks Consensus Estimate of $566.6 million by 0.9% but fell 5.2% year over year.
Inside the Headlines
Comps at Cheesecake Factory restaurants declined 0.9%, whereas the year-ago quarter marked a 1.1% growth in comps and the preceding quarter marked a 2.3% decline. Pricing was up 2.5%, traffic was down 2.8% and mix was a negative 0.4%.
Cost of sales ratio increased 20 basis points (bps) year over year to 23.4%. Meanwhile, labor expense ratio was 34.5%, up 90 bps year over year. This was primarily driven by higher hourly wage rates and some deleverage.
General and administrative expenses accounted for 6.1% of revenues in fourth-quarter fiscal 2017, up 80 bps from the prior-year quarter. The upside can be attributed to lower bonus accrual and lower stock-based compensation expense, partially offset by higher legal costs. Notably, pre-opening expenses were roughly $7.6 million, up from $7 million in the year-ago quarter.
Fiscal 2017 Highlights
Sales of $2.26 billion deteriorated 0.5% year over year. Adjusted earnings of $2.60 per share declined 8.1% year over year.
Balance Sheet
As of Jan 2, 2018, cash and cash equivalents amounted to $6 million, compared with $53.8 million as of Jan 3, 2017.
Management announced a cash dividend of 29 cents per share of common stock. The dividend will be payable on Mar 20, 2018 to the stockholders of record at the close of business on Feb 28, 2018.
During the fourth quarter of fiscal 2017, Cheesecake Factory repurchased approximately 0.4 million shares of its common stock at a cost of $16.6 million. In fiscal 2017, the company repurchased a total of 2.6 million shares of its common stock worth $123.0 million.
First-Quarter Fiscal 2018 Outlook
For the upcoming quarter, adjusted earnings per share are estimated in the range of 66-70 cents based on an anticipated comps outlook in the range of 0.5-1.5% at Cheesecake Factory restaurants.
The company projects corporate tax rate for the first quarter to be approximately 13%.
Fiscal 2018 Guidance
The company expects earnings in the range of $2.64-$2.80. The Zacks Consensus Estimate for fiscal 2018 earnings is pegged at $2.60.
Meanwhile, the company continues to expect comps of flat to up 1%.
Capital expenditures for the year are now projected in the range of $90-$105 million.
Additionally, Cheesecake Factory continues to expect to open four to six company-owned restaurants in fiscal 2018.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter compared to three lower.
The Cheesecake Factory Incorporated Price and Consensus
The Cheesecake Factory Incorporated Price and Consensus | The Cheesecake Factory Incorporated Quote
VGM Scores
At this time, CAKE has a nice Growth Score of B, though it is lagging a lot on the momentum front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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.
Our style scores indicate that the stock is more suitable for value investors than growth investors.
Outlook
Estimates have been broadly trending upward for the stock and the magnitude of these revisions looks promising. Interestingly, CAKE has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.