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What Awaits Cheesecake Factory's (CAKE) This Earnings Season?

Zacks Equity Research
·3 min read

The Cheesecake Factory Incorporated CAKE is scheduled to report first-quarter 2020 results on May 5, after market close. In the last-reported quarter, the company delivered a negative earnings surprise of 4.9%. However, it beat the Zacks Consensus Estimate in three of the trailing four quarters, the average being 2.2%.

How Are Estimates Placed?

The Zacks Consensus Estimate for first-quarter bottom line is pegged at a loss of 46 cents per share, indicating a decline from earnings of 62 cents recorded in the year-ago quarter. For revenues, the consensus mark is pegged at $613.9 million, suggesting an increase of 2.4% from the year-ago figure.

Let's take a look at how things have shaped up in the quarter.

The Cheesecake Factory Incorporated Price and EPS Surprise


The Cheesecake Factory Incorporated Price and EPS Surprise
The Cheesecake Factory Incorporated Price and EPS Surprise

The Cheesecake Factory Incorporated price-eps-surprise | The Cheesecake Factory Incorporated Quote

Factors at Play

The impact of the coronavirus pandemic is likely to reflect on Cheesecake Factory’s first-quarter 2020 results.

With majority of the outlets temporarily closed, the company is operating only through pickup and delivery services. Due to this, traffic has declined considerably compared to pre-outbreak levels. The company expects first-quarter fiscal 2020 comparable restaurant sales to decline nearly 13%. Due to the pandemic, the company’s sales fell 46% in March.

Moreover, the company has been increasingly focusing on delivery channels, which again is expected to have driven off-premise sales during the first quarter. Moreover, initiatives like menu innovation, expansion strategies and digital enhancement are likely to have boosted the top line. Markedly for the first quarter, the Zacks Consensus Estimate for restaurant revenues is pegged at $568 million, which indicates 3.5% growth from the year-ago quarter’s reported figure.

However, high costs remain a concern for the company. Pre-opening costs of outlets, given the company’s unit expansion plans, expenses related to sales initiatives and higher labor expenses have been bumping up costs.

What Our Model Says

Our proven model does not predict an earnings beat for Cheesecake Factory this time around. A stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to beat estimates. But that's not the case here.

Earnings ESP: Cheesecake Factory has an Earnings ESP of -11.10%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Poised to Beat Earnings Estimates

Here are some stocks from the Zacks Retail-Wholesale sector that investors may consider as our model shows that these have the right combination of elements to post an earnings beat in the upcoming releases:

Papa John's International, Inc. PZZA has a Zacks Rank #3 and an Earnings ESP of +5.06%.

Potbelly Corporation PBPB has a Zacks Rank #3 and an Earnings ESP of +16.18%.

Big Lots, Inc. BIG a Zacks Rank #3 and an Earnings ESP of +0.48%.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

Today, See These 5 Potential Home Runs >>

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The Cheesecake Factory Incorporated (CAKE) : Free Stock Analysis Report
Big Lots, Inc. (BIG) : Free Stock Analysis Report
Papa John's International, Inc. (PZZA) : Free Stock Analysis Report
Potbelly Corporation (PBPB) : Free Stock Analysis Report
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