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Is The Cheesecake Factory Incorporated (CAKE) Stock Attractively Valued?

Baron Funds, an investment management company, released its “Baron Small Cap Fund” third quarter 2022 investor letter. A copy of the same can be downloaded here. In the third quarter, the fund declined 3.64% (Institutional Shares), underperforming the Russell 2000 Growth Index, which was 0.24% up, and outperforming the S&P 500 Index, which was 4.88% down. In addition, please check the fund’s top five holdings to know its best picks in 2022.

Baron Funds discussed stocks like The Cheesecake Factory Incorporated (NASDAQ:CAKE) in the Q3 2022 investor letter. Headquartered in Calabasas, California, The Cheesecake Factory Incorporated (NASDAQ:CAKE) is a restaurant operator. On October 31, 2022, The Cheesecake Factory Incorporated (NASDAQ:CAKE) stock closed at $35.81 per share. One-month return of The Cheesecake Factory Incorporated (NASDAQ:CAKE) was 13.97%, and its shares lost 12.93% of their value over the last 52 weeks. The Cheesecake Factory Incorporated (NASDAQ:CAKE) has a market capitalization of $1.87 billion.

Here is what Baron Funds specifically said about The Cheesecake Factory Incorporated (NASDAQ:CAKE)  in its Q3 2022 investor letter:

"During the quarter, we added to our position in The Cheesecake Factory Incorporated (NASDAQ:CAKE). The operator of the namesake restaurant concept has declined approximately 50% from its peak back in the spring of 2021. Currently, the stock is trading at what we believe is a very attractive valuation (P/E of approximately 12 times our depressed 2023 estimated earnings) with an attractive dividend yield (about 3.5%) and two up-and-coming growth concepts (North Italia and Flower Child) that we believe will spur unit growth for years to come. While we acknowledge the economic challenges facing the consumer over the near term and the negative impact that will have on Cheesecake Factory’s sales, the current stock price more than reflects these headwinds, and we believe the stock has the potential to double in value when the economy recovers."

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The Cheesecake Factory Incorporated (NASDAQ:CAKE) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 13 hedge fund portfolios held The Cheesecake Factory Incorporated (NASDAQ:CAKE) at the end of the second quarter which was 17 in the previous quarter.

We discussed The Cheesecake Factory Incorporated (NASDAQ:CAKE) in another article and shared the list of restaurant stocks to avoid as Americans begin to cut spending. In addition, please check out our hedge fund investor letters Q3 2022 page for more investor letters from hedge funds and other leading investors.

 

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Disclosure: None. This article is originally published at Insider Monkey.