Q2 STOCKS TO BUY

Call Traders Circle CAKE Days After Earnings

Cheesecake Factory stock's price may still be too high

facebook X logo linkedin


The Cheesecake Factory Incorporated (NASDAQ:CAKE) is an American restaurant and distributor of cheesecakes. CAKE currently owns and operates 301 restaurants throughout the United States and Canada under brands including The Cheesecake Factory, North Italia, and a collection within their Fox Restaurant Concepts business. In addition, CAKE's bakery division operates two facilities that produce cheesecakes and other baked products for their restaurants, international licensees, and third-party bakery customers. At last check, the restaurant giant was trading down 5.6% at $42.61.

Cheesecake Factory stock has increased approximately 85% year-over-year and by 87% since bottoming at a decade low of $22.75, this time last year. Additionally, shares of CAKE have grown by 16% year-to-date. However, Cheesecake Factory stock is down by 35% since reaching its four-year peak of $65.81.

The Cheesecake Factory has outperformed earnings expectations on three of its last four earnings reports. For Q2 and Q3 of 2020, mid-pandemic, Cheesecake Factory dropped into negative earnings territory by managed to outperform estimates by margins of $0.25 and $0.09, respectively. It took until the fourth quarter of 2020 for CAKE to miss estimates while still in negative earnings territory, despite a slightly increased EPS. So far in 2021, Cheesecake Factory returned to positive earnings territory for Q1 of 2021 and simultaneously returned an earnings beat with a margin of $0.26. Wall Street anticipates another jump in earnings per share for CAKE's fiscal second-quarter report, due out in late October.

From a fundamental perspective, Cheesecake Factory stock’s valuation has grown far faster than CAKE has been able to recover from the pandemic’s impact. Cheesecake Factory stock maintains a relatively high forward price-earnings ratio of 22.68. Moreover, CAKE's net income is still down by about $150 million since fiscal 2019. Overall, it is possible that Cheesecake Factory stock will continue to downtrend in order to fix an overcorrection, which could open up an opportunity for long-term investors looking to buy CAKE at a better price.

Shifting gears, short interest has dropped 5.6% during the past two reporting periods. The 5.36 million shares sold short make up 12.5% of the stock's available float, or just over a week's worth of pent-up buying power.

The options pits tell a different story, with a clear preference for calls. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), the equity's 50-day call/put volume ratio of 3.38 sits higher than 92% of readings from the past year. In other words, long calls are getting picked up at a faster-than-usual pace, with the most popular this afternoon the August 40 call.

 
 

“Buy This Stock Now!” - Expert Who Called 11x On TSLA

He called a rare 11x on Tesla…

But now, thanks to Elon & Trump’s new alliance…

He says there’s a new opportunity that could be 1,000x BIGGER than Tesla – and it could completely revolutionize a $23 Trillion market.

It’s trading for less than $5 per share right now…

But it won’t be under the radar for long.

Discover The 1,000x Bigger Elon Opportunity Here

GRAND SLAM COUNTDOWN

 
 

Featured Articles from Trusted Partners:

👀Learn How Dividends Create Passive Income for Life
Receive $200 Off Motley Fool Epic. The Motley Fool Epic $299 discounted offer is based on $499/year list price. Introductory promotion for new members only. Take control of your money and your portfolio with Motley Fool Epic.

💵New Income System Could Pay You $4,243 Monthly
You could collect an average of $4,243 per month starting as early as next week with a new payout system for income investors. New registrations are being accepted for investors who want to be in a position to start with their first payout next week.

🚀Easy 92% Crypto Dividends (No Coins Required)
COIN stock doesn't pay a dividend... But there's actually a new way to collect a massive dividend that's indirectly based on the stock and offers a terrific monthly income (currently yielding nearly 92% on a forward basis).

🤝Free Advisor Match with Wiseradvisor.com
Don't leave your retirement to chance! Get matched with a trusted financial expert for FREE and make the most of your tax refund. Get started now.

⚠️Dennis Quaid's #1 Warning for Americans
Here's the thing: life doesn't come with guarantees. The economy shifts, markets stumble, and years of hard work could slip through your fingers like sand. But it doesn't have to be that way for you. So request a free copy of this Gold & Silver Guide that will arrive right to your doorstep when you act now.

 

 
 

Follow us on X, Follow us on Twitter