How Will Cheesecake Factory (CAKE) Stock Be Impacted By Its Earnings Report?

Tickers in this article: CAKE

NEW YORK (TheStreet) -- The Cheesecake Factory Inc.  shares are flat following the release of the company's first quarter earnings report.

Year over year quarterly revenue increased 4% to $484.4 million, beating analysts estimates of $478.8 million.

Net income for the quarter was $22.6 million, or 43 cents per share, missing analysts consensus estimates by -6 cents.

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TheStreet Ratings team rates CHEESECAKE FACTORY INC as a Buy with a ratings score of A. TheStreet Ratings Team has this to say about their recommendation:

"We rate CHEESECAKE FACTORY INC (CAKE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • CAKE's revenue growth has slightly outpaced the industry average of 3.8%. Since the same quarter one year prior, revenues slightly increased by 2.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • CHEESECAKE FACTORY INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, CHEESECAKE FACTORY INC increased its bottom line by earning $2.11 versus $1.78 in the prior year. This year, the market expects an improvement in earnings ($2.35 versus $2.11).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and greatly outperformed compared to the Hotels, Restaurants & Leisure industry average. The net income increased by 49.0% when compared to the same quarter one year prior, rising from $22.14 million to $33.00 million.
  • You can view the full analysis from the report here: CAKE Ratings Report
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