Cheesecake Factory (CAKE) to Post Q2 Earnings: What's in Store?
The Cheesecake Factory Incorporated CAKE is scheduled to report second-quarter fiscal 2023 results on Aug 2. In the previous quarter, the company’s earnings beat the Zacks Consensus Estimate by 3.4%.
How are Estimates Placed?
The Zacks Consensus Estimate for earnings per share is pegged at 81 cents, indicating growth of 55.8% from 52 cents registered in the year-ago quarter.
For revenues, the consensus mark is pegged at $881.4 million, suggesting an increase of 5.9% from the prior-year quarter’s figure.
Let’s discuss the factors likely to get reflected in the quarter to be reported.
Factors at Play
Cheesecake Factory’s fiscal second-quarter performance is likely to have benefited from solid off-premise sales, robust same-store sales growth and unit-expansion efforts. Rise in average check and menu pricing has been contributing to CAKE’s top line. Management anticipates revenues in the range of $870-$890 million. We expect Cheesecake Factory, North Italia same-store sales to grow 3.4% and 7.5% year over year, respectively.
Off-premise sales contributed approximately 23% of the company’s restaurant sales during first-quarter fiscal 2023 and the uptrend is likely to have continues in second quarter as well. It continues to perform well in the delivery channel.
In order to boost consumer convenience, management has implemented operational changes and technology upgrades, which include a contactless menu and payment technology, and text paging. We believe that a boost in customer count coupled with targeted off-premise marketing are likely to aid CAKE’s results.
Our model predicts Cheesecake Factory and North Italia Restaurants’ revenues to rise 4.6% and 21.2% year over year, respectively. Also, we estimate Other FRC revenues to climb 9.8% year over year to $65.9 million.
On the flip side, high costs are concerning. Pre-opening costs of outlets — given the company’s unit expansion plans, expenses related to sales initiatives, higher labor costs and additional cleaning fees — are likely to have hurt profits.
For second-quarter fiscal 2023, management anticipates commodity inflation in high single digits. Labor inflation is expected in the mid-single digits range. Our model estimates cost of sales and labor expenses to rise 1% and 4.7% year over year to $206.2 million and $318.8 million, respectively, in the to-be-reported quarter.
The Cheesecake Factory Incorporated Price and EPS Surprise
The Cheesecake Factory Incorporated price-eps-surprise | The Cheesecake Factory Incorporated Quote
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Cheesecake Factory this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Cheesecake Factory has an Earnings ESP (the difference between the Most Accurate Estimate and the Zacks Consensus Estimate) of -2.34%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Cheesecake Factory currently carries a Zacks Rank #3.
Stocks Poised to Beat Estimates
Here are some stocks worth considering from the Zacks Retail-Wholesale space as our model shows that these have the right combination of elements to beat on earnings this season.
Arhaus ARHS currently has an Earnings ESP of +7.69% and sports a Zacks Rank #1. ARHS is expected to register a bottom-line decline when it reports second-quarter 2023 results. The Zacks Consensus Estimate for quarterly earnings per share of 26 cents suggests a fall of 7.1% from the year-ago quarter. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arhaus’ top line is anticipated to rise year over year. The consensus mark is pegged at $325.7 million, indicating an increase of 6.3% from the year-ago quarter’s reported figure. ARHS has a trailing four-quarter earnings surprise of 82.4%, on average.
Ross Stores ROST currently has an Earnings ESP of +11.50% and carries a Zacks Rank #2. ROST is likely to register a bottom-line improvement while reporting second-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $1.14 implies a rise of 2.7% from the year-ago quarter.
Ross Stores’ top line is expected to jump year over year. The Zacks Consensus Estimate is pegged at $4.72 billion, which suggests a gain of 3% from the prior-year quarter’s levels. ROST has a trailing four-quarter earnings surprise of 11.5%, on average.
Costco COST currently has an Earnings ESP of +0.73% and a Zacks Rank of 3. COST is likely to register bottom-line growth while posting fourth-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for quarterly earnings per share of $4.73 indicates a 10.5% increase from the year-ago reported number.
Costco’s top line is projected to ascend year over year. The Zacks Consensus Estimate is pegged at $78.85 billion, indicating 9.4% rise from the prior-year quarter. COST has a trailing four-quarter earnings surprise of 1.8%, on average.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
The Cheesecake Factory Incorporated (CAKE) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
Ross Stores, Inc. (ROST) : Free Stock Analysis Report
Arhaus, Inc. (ARHS) : Free Stock Analysis Report
