Is Cheesecake Factory getting stale?
9 Days ago it was reported.....The stock drops after a research note questions the company's projections.
The company's business may be slowing down.
The stock dropped by as much as 5% Monday after an analyst at William Blair
& Co. cut her rating to "market perform" from "outperform."
The stock's slide put the brakes on what had been a pretty nice year of growth. Shares fell below $25 last October, but climbed back to nearly $33 last week. Heading into the close Monday, the stock was down to $30.29.
The analysts at William Blair said their checks showed a choppy May for the casual dining sector, and that comes after a softer April. The Cheesecake Factory is not immune to these industry trends, writes analyst Sharon Zackfia.
As a result, the analysts are expecting Cheesecake Factory sales to slow. They think same-store sales will be at or below the low end of the company's forecast for the second quarter. Executives estimated that sales growth would be 1.5% to 2.5%, compared to 2.1% growth a year earlier.
The William Blair analysts are estimating quarterly revenue at $448 million, about $10 million below the consensus. They think the company has enough wiggle room to meet its full-year earnings guidance of $1.83 to $1.91 a share. But, Zackfia wrote, "we are increasingly worried about the potential for more downside than upside to our and the consensus estimates of $1.88."
The majority of analysts covering the stock have a "hold" rating, perhaps because the stock has just become too expensive. "The greater risk, however, could be a very range-bound stock absent some catalyst for sales both for The Cheesecake Factory and the broader casual dining space," Zackfia added.
Perhaps a better buy in this sector is Darden Restaurants (DRI +0.14%), owner of Red Lobster and Olive Garden,notes Jonas Elmerraji of TheStreet. It's "the casual dining firm that's best been able to succeed in this challenging economic environment," he adds. Plus, Darden pays a 3.3% dividend yield and may increase its dividend in the next quarter.
The stock's slide put the brakes on what had been a pretty nice year of growth. Shares fell below $25 last October, but climbed back to nearly $33 last week. Heading into the close Monday, the stock was down to $30.29.
The analysts at William Blair said their checks showed a choppy May for the casual dining sector, and that comes after a softer April. The Cheesecake Factory is not immune to these industry trends, writes analyst Sharon Zackfia.
As a result, the analysts are expecting Cheesecake Factory sales to slow. They think same-store sales will be at or below the low end of the company's forecast for the second quarter. Executives estimated that sales growth would be 1.5% to 2.5%, compared to 2.1% growth a year earlier.
The William Blair analysts are estimating quarterly revenue at $448 million, about $10 million below the consensus. They think the company has enough wiggle room to meet its full-year earnings guidance of $1.83 to $1.91 a share. But, Zackfia wrote, "we are increasingly worried about the potential for more downside than upside to our and the consensus estimates of $1.88."
The majority of analysts covering the stock have a "hold" rating, perhaps because the stock has just become too expensive. "The greater risk, however, could be a very range-bound stock absent some catalyst for sales both for The Cheesecake Factory and the broader casual dining space," Zackfia added.
Perhaps a better buy in this sector is Darden Restaurants (DRI +0.14%), owner of Red Lobster and Olive Garden,notes Jonas Elmerraji of TheStreet. It's "the casual dining firm that's best been able to succeed in this challenging economic environment," he adds. Plus, Darden pays a 3.3% dividend yield and may increase its dividend in the next quarter.
I hate to use the term Stale but, what are we suppose to do when new luxurious restaurants are opening up everyday? *Shrugs*
Comments
Post a Comment
I look forward to your replies, Thanks again!