News

The Cheesecake Factory Incorporated CAKE is scheduled to report fourth-quarter fiscal 2023 results on Feb 21, after market close. In the previous quarter, the company’s earnings and revenues missed the Zacks Consensus Estimate by 7.1% and 1.4%, respectively. However, the metrics improved on a year-over-year basis.

How are Estimates Placed?

For the quarter to be reported, the Zacks Consensus Estimate for earnings per share has remained unchanged at 74 cents in the past 60 days. The estimated figure indicates a 32.1% increase from 56 cents per share reported in the year-ago quarter.

For revenues, the consensus mark is pegged at nearly $877.3 million. The metric suggests a drop of 1.7% from the year-ago quarter’s figure.

The Cheesecake Factory Incorporated Price and EPS Surprise

Let’s discuss the factors that are likely to be reflected in the quarter to be reported.

Factors at Play

Cheesecake Factory’s fiscal fourth-quarter performance is expected to have been hurt by supply chain challenges, delays in permitting, construction, landlord readiness, and equipment availability. Additionally, commodity inflation is likely to have contributed to the negatives. CAKE was cautious about the ongoing uncertain macroeconomic environment and anticipated the headwinds would persist for some time. Our model predicts Cheesecake Factory Restaurants’ revenues to decline 2.7% year over year to $656.1 million.

For fourth-quarter fiscal 2023, management anticipates commodity and labor inflation to be in the low to mid-single-digit range.

However, solid off-premise sales, robust same-store sales growth and unit-expansion efforts are expected to have partially offset these headwinds. The 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 and North Italia same-store sales to rise 4% and 8.3% year over year, respectively.

Our model predicts North Italia Restaurants and Other FRC revenues to rise 8.5% and 5.4% year over year to $71.1 million and $70.1 million, respectively.

Off-premise sales contributed approximately 21% of the company’s restaurant sales during third-quarter fiscal 2023 and the uptrend is likely to have continued in the fourth quarter as well. It continues to perform well in the delivery channel.

To boost consumer convenience, management has implemented operational changes and technology upgrades, which include a contactless menu and payment technology and text paging. Our model estimates the cost of sales and labor expenses to decline 6.6% and 1.5% year over year to $206 million and $313.7 million, respectively, in the to-be-reported quarter.

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 of -0.12%. 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. 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 - Restaurants industry that investors may consider, as our model shows that these have the right combination of elements to post an earnings beat in the quarter to be reported:

Dave & Buster's Entertainment, Inc. PLAY has an Earnings ESP of +3.51% and a Zacks Rank of 2.

PLAY’s earnings for the quarter under review are expected to increase 42.5%. It reported better-than-expected earnings in three of the trailing four quarters and in line on the remaining one occasion, the average surprise being 34.5%.

Darden Restaurants, Inc. DRI has an Earnings ESP of +1.11% and a Zacks Rank of 3.

DRI is expected to register 12.8% growth in earnings for the quarter to be reported. It reported better-than-expected earnings in each of the trailing four quarters, the average surprise being 4.2%.

Jack in the Box Inc. JACK has an Earnings ESP of +1.30% and a Zacks Rank of 3.

JACK’s earnings for the to-be-reported quarter are expected to decline 3%. It reported better-than-expected earnings in three of the trailing four quarters and missed on the remaining one occasion, the average surprise being 10.1%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.