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The Cheesecake Factory Incorporated Message Board

  • locklimitup locklimitup May 1, 2012 12:32 PM Flag

    CAKE worth 62?

    Translate PF Changs takeout value versus CAKE and Cheesecake Factory should be trading about double where it is right now.

    33 times earnings is around $62/share.

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    • Its all about who you know. The buyer of PFC got screwed but how much do you want to bet that the people administrating the buyout are not using their own cash but rather their own investors cash? Money talks and #$%$ walks.

      I think we all know that PFC is doomed. Their food, and I am not kidding, is no better than panda rice. In fact, the orange chicken at panda rice is 10x better. The only thing PFC has is ok deserts, alcohol, a bigger menu. Otherwise the quality is fast food level.

    • CAKE is actually growing faster than PFCB and has a PEG of 1.07 versus PFCB at 2.07.

      An argument can be made that they paid way too much to take PFCB private but that same logic says that CAKE is way undervalued here.

      If PFCB can go out at over 30 times earnings, CAKE at 15 times next year's earnings seems ripe for acquisition.

      Rarely are there two acquisitions in the same industry that close to each other but if nothing else, it shows how cheap CAKE is right here.

    • Given that PFCB is known to be underperforming in terms of profit, I would look more at price to sales, which is only 0.88. At that ratio, CAKE would be priced at $29 / share. Of course, a buyer expects to turn a profit on top of that, but I don't see a similar buyout opportunity here, because results have not been as dismal.

    • There's usually a modest premium when a profitable company goes through a buyout, but for something with CAKE's slow growth I wouldn't expect a double.

 
CAKE
45.87-0.29(-0.63%)Sep 19 4:15 PMEDT

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