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Quo Vadis warns on the setup on Cheesecake Factory Incorporated (NASDAQ:CAKE) ahead of the restaurant operator’s earnings report on April 27.
Cheesecake Factory (CAKE) is kept on the Short/Sell list at the firm due to the risk of a share price drop on any perceived weakness with the business.
Analyst Jon Zolidis: “We believe the company’s core concept is a long-term share loser and believe pandemic-driven off-premise levels will bleed lower, rather than proving to be permanently sticky”. The company’s growth concepts are dilutive. Looking at analyst estimates, the Street has CAKE getting back to 2019 RLM of 15.7% and earning $4 per share by 2024. This is in contrast to the near-term with 1Q22 RLM forecasted 200 bps below 2019, despite the fact that sales productivity has already recovered.”
Zolidis and team think long-term forecasts on CAKE need to come down and doubt investors will be willing to underwrite accelerating sales growth due to pricing in the current environment. Shares of CAKE are expected to head lower on any perceived weakness in the business.
Shares of Cheesecake Factory (CAKE) fell 1.27% premarket to $37.23.
Cheesecake Factory has missed the consensus EPS mark in three of its last four earnings reports.
