Cheesecake Factory Inc (CAKE) Stock Analysis and Metrics

Sector: Consumer Cyclical Industry: Restaurants CIK: 0000887596

Market Cap 2.41 Bn

P/B 5.66

P/E 14.98

P/S 0.65

ROIC (Qtr) 7.12

Div Yield % 2.64

Rev 1y % (Qtr) 4.82

Total Debt (Qtr) 2.14 Bn

Debt/Equity (Qtr) 5.03

About

The Cheesecake Factory Incorporated, commonly known as CAKE, operates in the dining and restaurant industry, specifically within the upscale casual dining segment. The company's primary business activities involve the management of a diverse portfolio of restaurants, which are spread across the United States and Canada. The Cheesecake Factory's restaurants are known for their wide-ranging menus, offering a variety of dishes from appetizers, pizza, seafood, steaks, chicken, burgers, to desserts. Each dish is prepared fresh daily using high-quality...

The Cheesecake Factory Incorporated, commonly known as CAKE, operates in the dining and restaurant industry, specifically within the upscale casual dining segment. The company's primary business activities involve the management of a diverse portfolio of restaurants, which are spread across the United States and Canada.

The Cheesecake Factory's restaurants are known for their wide-ranging menus, offering a variety of dishes from appetizers, pizza, seafood, steaks, chicken, burgers, to desserts. Each dish is prepared fresh daily using high-quality ingredients, contributing to the company's reputation for providing excellent food quality. The customer base for these restaurants is diverse, catering to a broad demographic range.

The Cheesecake Factory operates under various brands, including The Cheesecake Factory, North Italia, Flower Child, and Fox Restaurant Concepts. The Cheesecake Factory brand is the most well-known, recognized for its extensive menu offerings and innovative dishes.

In terms of competition, The Cheesecake Factory competes directly and indirectly with national and regional casual dining restaurant chains, as well as independently-owned restaurants. The company's competitive positioning is bolstered by its extensive and innovative menu, commitment to excellent service and hospitality, high-quality, high-profile restaurant locations, and distinctive restaurant design and decor.

The Cheesecake Factory's primary products are its extensive menu offerings. However, it's worth noting that the company's bakery operations also play a significant role. These operations produce approximately 60 varieties of proprietary cheesecakes and other baked desserts for The Cheesecake Factory restaurants and for international licensees and third-party customers.

The Cheesecake Factory has a strong culture that is centered around its people. The company believes that its people are the foundation of its success and invests significant resources in training and development programs. This commitment extends to promoting a culture of diversity, equity, and inclusion.

In addition, The Cheesecake Factory is committed to conducting business in a responsible and sustainable manner. The company has a number of initiatives in place to reduce its environmental impact, including recycling programs, energy-efficient equipment, and sustainable sourcing practices. The company also has a number of social responsibility initiatives, including a community outreach program and a charitable foundation.

The Cheesecake Factory's international segment is also noteworthy. The company has licensing agreements with three restaurant operators to develop and operate The Cheesecake Factory brand restaurants in selected international markets. As of February 26, 2024, the company's international licensees operated 33 The Cheesecake Factory restaurants in Kuwait, Bahrain, Saudi Arabia, Qatar, United Arab Emirates, Mexico, Hong Kong, and Thailand.

Price action

Investment thesis

Bull case

Operating cash flow of 320.38M provides exceptional 27.66x coverage of interest expenses 11.58M, showing strong debt service capability.
Operating cash flow of 320.38M provides strong 11.08x coverage of stock compensation 28.91M, indicating sustainable incentive practices.
Operating cash flow of 320.38M fully covers other non-current liabilities 140.13M by 2.29x, showing strong long-term stability.
Free cash flow of 159.47M provides exceptional 13.77x coverage of interest expense 11.58M, showing strong debt service ability.
Operating cash flow of 320.38M provides strong 5.05x coverage of inventory 63.41M, indicating efficient inventory management.

Bear case

Operating cash flow of 320.38M barely covers its investment activities of (162.02M), with a coverage ratio of -1.98, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
Operating cash flow of 320.38M provides thin coverage of dividend payments of (52.65M) with a -6.09 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
Operating earnings of 189.11M show weak coverage of depreciation charges of 106.80M, with a 1.77 ratio indicating high capital intensity and potential reinvestment needs.
Operating cash flow of 320.38M barely covers operating expenses of 1.13B with a 0.28 ratio, suggesting thin operational efficiency margins and limited flexibility.
Operating cash flow of 320.38M is outpaced by equity issuance of (106.40M) (-3.01 ratio), indicating concerning reliance on equity markets for funding operations.

Peer comparison

Companies in the Restaurants

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	MCD	Mcdonalds Corp	222.05 Bn	26.39	8.45	55.82 Bn
2	SBUX	Starbucks Corp	95.51 Bn	51.45	2.57	26.61 Bn
3	CMG	Chipotle Mexican Grill Inc	50.94 Bn	33.15	4.32	4.98 Bn
4	YUM	Yum Brands Inc	43.17 Bn	29.83	5.36	11.55 Bn
5	QSR	Restaurant Brands International Inc.	22.43 Bn	24.33	2.42	15.64 Bn
6	DRI	Darden Restaurants Inc	21.91 Bn	19.91	1.77	6.16 Bn
7	YUMC	Yum China Holdings, Inc.	18.12 Bn	20.05	1.57	1.84 Bn
8	DPZ	Dominos Pizza Inc	14.57 Bn	24.72	3.01	5.05 Bn

Industry comparisons

Current Valuation	Value	Ind Avg
EV to Assets EV to Assets	1.35	2.05
EV to Cash from Ops. EV/CFO	13.61	16.57
EV to Debt EV to Debt	2.04	4.75
EV to EBIT EV/EBIT	23.06	3.45
EV to EBITDA EV/EBITDA	14.18	9.76
EV to Free Cash Flow [EV/FCF] EV/FCF	27.34	29.06
EV to Market Cap EV to Market Cap	1.81	6.55
EV to Revenue EV/Rev	1.17	2.40
Price to Book Value [P/B] P/B	5.66	-1.40
Price to Earnings [P/E] P/E	14.98	13.35

Dividend Metrics	Value	Ind Avg
Dividend Coverage Ratio Div Coverage (Qtr)	3.05	-9.56
Dividend Payout Ratio % Div Payout % (Qtr)	31.70	18.72
Dividend per Basic Share Div per Share (Qtr)	1.08	0.84
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr)	31.56	30.41
Interest Coverage Int. cover (Qtr)	16.33	-86.85

Growth Metrics	Value	Ind Avg
Capex Growth (1y) % Capex 1y % (Qtr)	6.54	-24.56
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr)	263.84	35.50
Dividend Growth (1y) % Div 1y % (Qtr)	0.00	-0.72
EBIAT Growth (1y) % EBIAT 1y % (Qtr)	22.28	-564.81
EBITDA Growth (1y) % EBITDA 1y % (Qtr)	28.73	25.78
EBIT Growth (1y) % EBIT 1y % (Qtr)	31.85	-507.68
EBT Growth (1y) % EBT 1y % (Qtr)	35.14	-41.98
EPS Growth (1y) % EPS 1y % (Qtr)	26.30	-126.51
FCF Growth (1y) % FCF 1y % (Qtr)	127.74	5,724.78
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr)	8.03	23.70

Liquidity Ratios	Value	Ind Avg
Asset Utilization Ratio Asset Util Ratio (Qtr)	1.14	0.99
Cash Payout Ratio Cash Payout (Qtr)	0.11	0.07
Cash Ratio Cash Ratio (Qtr)	0.25	0.78
Current Ratio Curr Ratio (Qtr)	0.55	1.47
Debt to Equity Ratio Debt/Equity (Qtr)	5.03	0.05
Interest Cover Ratio Int Coverage (Qtr)	16.33	-86.85
Times Interest Earned Times Interest Earned (Qtr)	16.33	-86.85

Profitability	Value	Ind Avg
EBITDA Margin % EBITDA Margin % (Qtr)	8.00	7.71
EBIT Margin % EBIT Margin % (Qtr)	5.10	-2.27
EBT Margin % EBT Margin % (Qtr)	4.78	-1.97
Gross Margin % Gross Margin % (Qtr)	43.00	34.04
Net Profit Margin % Net Margin % (Qtr)	4.30	-3.69

Cheesecake Factory Inc (NASDAQ: CAKE)

About

Price action

Investment thesis

Bull case

Bear case

Peer comparison

Industry comparisons

Create an account

Sign In

Reset Password

Get Pro for 60% off