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Cheesecake Factory's (CAKE) Earnings Surpass Estimates in Q2
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The Cheesecake Factory Incorporated (CAKE - Free Report) reported mixed second-quarter fiscal 2019 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues fell short of the same. While the bottom line outpaced the consensus mark for the second straight quarter, the top line missed the same for the fourth consecutive quarter.
In the quarter under review, adjusted earnings came in at 82 cents per share, exceeding the Zacks Consensus Estimate of 81 cents. The bottom line also improved 22.4% from the prior-year quarter number.
Notably, quarterly results were driven by comps growth at the Cheesecake Factory restaurants. The company’s sales-building initiatives as well as cost containment efforts also provided a boost to its performance in the second quarter.
Let’s take a closer look at the numbers.
Detailed Revenue Discussion
Total revenues of $602.6 million in the reported quarter missed the Zacks Consensus Estimate of $610 million. However, the top line improved 2.6% year over year on the back of increased comparable sales.
Comps at Cheesecake Factory restaurants increased 1% compared with 1.4% growth in the year-ago quarter.
The Cheesecake Factory Incorporated Price and EPS Surprise
Cost of sales ratio decreased 20 basis points (bps) year over year to 22.3% in the second quarter. Meanwhile, the labor expense ratio was 36.2%, up 20 bps from the year-ago quarter.
Other operating costs were 24.7% of revenues, up 80 bps from the year-ago quarter. General and administrative (G&A) expenses accounted for 6.2% of revenues, down 90 bps from the prior-year quarter. Notably, pre-opening expenses increased 20 bps year over year to 0.4% in the second quarter.
Balance Sheet
As of Jul 2, 2019, Cheesecake Factory’s cash and cash equivalents totaled $22.6 million compared with $26.6 million as of Jan 1, 2019.
In the second quarter of 2019, the company repurchased approximately 606,000 shares of its common stock for $28.1 million. In 2018, Cheesecake Factory bought back approximately 2.3 million shares of its common stock for $109.3 million.
The company’s board of directors declared a quarterly cash dividend of 36 cents per share of the common stock, up 9% from the dividend announced earlier. The new dividend is payable Aug 27, 2019, to its shareholders of record at the close of business on Aug 14, 2019.
Development Details
In fiscal 2019, Cheesecake Factory is likely to open five Cheesecake Factory restaurants, which include an opening in Oxnard, CA, during April.
Q3 Outlook
For the third quarter, adjusted earnings per share are estimated to be 52-57 cents based on anticipated comps in the range of flat to up 1% at Cheesecake Factory restaurants. Comps in the quarter are likely to be impacted by weak industry sales environment. The Zacks Consensus Estimate for third-quarter earnings is pegged at 61 cents.
Fiscal 2019 Guidance
For the fiscal year, Cheesecake Factory expects earnings of $2.58-$2.68 per share compared with $2.58-$2.70 projected earlier. The Zacks Consensus Estimate for 2019 earnings is pegged at $2.65, above the midpoint of the company’s guided range. Meanwhile, the company expects comps to grow 1-1.5%.
Food and wage inflations in 2019 are expected to be up nearly 2% and 6%, respectively.
For fiscal 2019, Cheesecake Factory continues to expect capital expenditure between $85 million and $95 million.
Darden (DRI - Free Report) reported fourth-quarter fiscal 2019 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same. Adjusted earnings of $1.76 per share beat the Zacks Consensus Estimate of $1.73. The bottom line also increased 26.6% year over year on higher revenues.
Domino’s (DPZ - Free Report) reported mixed second-quarter 2019 financial numbers, wherein earnings exceeded the Zacks Consensus Estimate but revenues missed the same. Adjusted earnings of $2.19 per share outpaced the Zacks Consensus Estimate of $2.00. The metric also increased 19% on a year-over-year basis. The bottom-line improvement was driven by higher net income and lower diluted share count as a result of share repurchases.
Chipotle (CMG - Free Report) reported better-than-expected results in the second quarter of 2019. Its adjusted earnings of $3.99 per share surpassed the Zacks Consensus Estimate of $3.69 by 8.1%. The bottom line also grew 39% from the year-ago quarter, backed by solid revenues and strong operating margins.
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Cheesecake Factory's (CAKE) Earnings Surpass Estimates in Q2
The Cheesecake Factory Incorporated (CAKE - Free Report) reported mixed second-quarter fiscal 2019 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues fell short of the same. While the bottom line outpaced the consensus mark for the second straight quarter, the top line missed the same for the fourth consecutive quarter.
In the quarter under review, adjusted earnings came in at 82 cents per share, exceeding the Zacks Consensus Estimate of 81 cents. The bottom line also improved 22.4% from the prior-year quarter number.
Notably, quarterly results were driven by comps growth at the Cheesecake Factory restaurants. The company’s sales-building initiatives as well as cost containment efforts also provided a boost to its performance in the second quarter.
Let’s take a closer look at the numbers.
Detailed Revenue Discussion
Total revenues of $602.6 million in the reported quarter missed the Zacks Consensus Estimate of $610 million. However, the top line improved 2.6% year over year on the back of increased comparable sales.
Comps at Cheesecake Factory restaurants increased 1% compared with 1.4% growth in the year-ago quarter.
The Cheesecake Factory Incorporated Price and EPS Surprise
The Cheesecake Factory Incorporated price-eps-surprise | The Cheesecake Factory Incorporated Quote
Costs in Detail
Cost of sales ratio decreased 20 basis points (bps) year over year to 22.3% in the second quarter. Meanwhile, the labor expense ratio was 36.2%, up 20 bps from the year-ago quarter.
Other operating costs were 24.7% of revenues, up 80 bps from the year-ago quarter. General and administrative (G&A) expenses accounted for 6.2% of revenues, down 90 bps from the prior-year quarter. Notably, pre-opening expenses increased 20 bps year over year to 0.4% in the second quarter.
Balance Sheet
As of Jul 2, 2019, Cheesecake Factory’s cash and cash equivalents totaled $22.6 million compared with $26.6 million as of Jan 1, 2019.
In the second quarter of 2019, the company repurchased approximately 606,000 shares of its common stock for $28.1 million. In 2018, Cheesecake Factory bought back approximately 2.3 million shares of its common stock for $109.3 million.
The company’s board of directors declared a quarterly cash dividend of 36 cents per share of the common stock, up 9% from the dividend announced earlier. The new dividend is payable Aug 27, 2019, to its shareholders of record at the close of business on Aug 14, 2019.
Development Details
In fiscal 2019, Cheesecake Factory is likely to open five Cheesecake Factory restaurants, which include an opening in Oxnard, CA, during April.
Q3 Outlook
For the third quarter, adjusted earnings per share are estimated to be 52-57 cents based on anticipated comps in the range of flat to up 1% at Cheesecake Factory restaurants. Comps in the quarter are likely to be impacted by weak industry sales environment. The Zacks Consensus Estimate for third-quarter earnings is pegged at 61 cents.
Fiscal 2019 Guidance
For the fiscal year, Cheesecake Factory expects earnings of $2.58-$2.68 per share compared with $2.58-$2.70 projected earlier. The Zacks Consensus Estimate for 2019 earnings is pegged at $2.65, above the midpoint of the company’s guided range. Meanwhile, the company expects comps to grow 1-1.5%.
Food and wage inflations in 2019 are expected to be up nearly 2% and 6%, respectively.
For fiscal 2019, Cheesecake Factory continues to expect capital expenditure between $85 million and $95 million.
Zacks Rank & Peer Releases
Cheesecake Factory carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Darden (DRI - Free Report) reported fourth-quarter fiscal 2019 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same. Adjusted earnings of $1.76 per share beat the Zacks Consensus Estimate of $1.73. The bottom line also increased 26.6% year over year on higher revenues.
Domino’s (DPZ - Free Report) reported mixed second-quarter 2019 financial numbers, wherein earnings exceeded the Zacks Consensus Estimate but revenues missed the same. Adjusted earnings of $2.19 per share outpaced the Zacks Consensus Estimate of $2.00. The metric also increased 19% on a year-over-year basis. The bottom-line improvement was driven by higher net income and lower diluted share count as a result of share repurchases.
Chipotle (CMG - Free Report) reported better-than-expected results in the second quarter of 2019. Its adjusted earnings of $3.99 per share surpassed the Zacks Consensus Estimate of $3.69 by 8.1%. The bottom line also grew 39% from the year-ago quarter, backed by solid revenues and strong operating margins.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>