February 28, 2016
NASDAQ: CAKE
CHEESECAKE FACTORY INC
BUY
A+
A
A-
HOLD
B+
B
Annual Dividend Rate
$0.80
B-
C+
C
Annual Dividend Yield
1.58%
SELL
C-
D+
D
Beta
0.41
Sector: Consumer Goods & Svcs
CAKE BUSINESS DESCRIPTION
The Cheesecake Factory Incorporated operates
full-service and casual dining restaurants. The
company also produces cheesecakes and other
baked products for foodservice operators, retailers,
and distributors.
Weekly Price: (US$)
D-
E+
E
E-
F
Market Capitalization
$2.5 Billion
Sub-Industry: Restaurants
SMA (50)
BUY
RATING SINCE
TARGET PRICE
52-Week Range
$44.16-$58.86
05/25/2010
$58.41
Price as of 2/25/2016
$50.57
Source: S&P
SMA (100)
1 Year
2 Years
60
TARGET
TARGET
TARGETPRICE
PRICE$58.41
$58.41
PRICE
$58.41
TARGET
58
55
53
STOCK PERFORMANCE (%)
3 Mo.
Price Change
4.52
1 Yr.
2.82
3 Yr (Ann)
14.20
Last Qtr
5.43
11.08
12.50
12 Mo.
6.27
15.05
16.66
3 Yr CAGR
5.10
5.79
9.07
RETURN ON EQUITY (%)
CAKE
Q4 2015
19.79
Q4 2014
18.19
Q4 2013
19.80
Ind Avg
24.45
39.72
22.46
S&P 500
12.28
14.59
13.97
50
48
GROWTH (%)
Revenues
Net Income
EPS
45
43
Rating History
BUY
Volume in Millions
10
5
2014
2015
2016
0
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
P/E COMPARISON
RECOMMENDATION
We rate CHEESECAKE FACTORY INC (CAKE) a BUY. This is driven by several positive factors, which we
believe should have a greater impact than any weaknesses, and should give investors a better performance
opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its
growth in earnings per share, increase in net income, revenue growth, reasonable valuation levels and solid
stock price performance. We feel its strengths outweigh the fact that the company shows low profit margins.
21.89
29.30
21.53
CAKE
Ind Avg
S&P 500
HIGHLIGHTS
CHEESECAKE FACTORY INC has improved earnings per share by 12.5% in the most recent quarter compared
to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share
growth over the past year. We feel that this trend should continue. During the past fiscal year, CHEESECAKE
FACTORY INC increased its bottom line by earning $2.31 versus $1.98 in the prior year. This year, the market
expects an improvement in earnings ($2.66 versus $2.31).
EPS ANALYSIS¹ ($)
2013
2014
Q4 0.54
Q3 0.52
Q2 0.69
Q1 0.56
Q4 0.48
Q3 0.48
Q2 0.59
Q1 0.43
Q4 0.62
Q3 0.50
Q2 0.52
Q1 0.47
The net income growth from the same quarter one year ago has greatly exceeded that of the S&P 500, but is
less than that of the Hotels, Restaurants & Leisure industry average. The net income increased by 11.1%
when compared to the same quarter one year prior, going from $24.49 million to $27.20 million.
2015
NA = not available NM = not meaningful
1 Compustat fiscal year convention is used for all fundamental
data items.
Despite its growing revenue, the company underperformed as compared with the industry average of 13.2%.
Since the same quarter one year prior, revenues slightly increased by 5.4%. This growth in revenue appears
to have trickled down to the company's bottom line, improving the earnings per share.
Compared to where it was trading a year ago, CAKE's share price has not changed very much due to (a) the
relatively weak year-over-year performance of the overall market, (b) the company's stagnant earnings, and
(c) other mixed results. Turning our attention to the future direction of the stock, it goes without saying that
even the best stocks can fall in an overall down market. However, in any other environment, this stock still
has good upside potential despite the fact that it has already risen in the past year.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 1
February 28, 2016
NASDAQ: CAKE
CHEESECAKE FACTORY INC
Sector: Consumer Goods & Svcs Restaurants Source: S&P
Annual Dividend Rate
$0.80
Annual Dividend Yield
1.58%
PEER GROUP ANALYSIS
450%
PLAY
V
FA
AB
OR
LE
UN
R
VO
FA
LE
AB
-50%
52-Week Range
$44.16-$58.86
Price as of 2/25/2016
$50.57
The foodservice industry employs more than 12 million people, making it America’s second largest employer
after the U.S. government. Not only is the industry huge, it’s growing, as factors - such as a rise in
two-income households - have been leading to increasing levels of dining out. In recent years, restaurant
sales have risen roughly 5% annually according to National Restaurant Association estimates. However,
despite its growth rate, the industry should be seen as mature. Companies within the industry generally earn
thin margins and face stiff competition. As a result, M&A activity is frequent as competitors look to spread
fixed costs across more locations.
BWLD
TXRH
CAKE
JACK WEN
PZZA
BLMN
EAT
5% CBRL
DIN
40%
EBITDA Margin (TTM)
Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $1.5 Billion and $3.5 Billion.
Companies with NA or NM values do not appear.
*EBITDA – Earnings Before Interest, Taxes, Depreciation and
Amortization.
REVENUE GROWTH AND EARNINGS YIELD
450%
Market Capitalization
$2.5 Billion
INDUSTRY ANALYSIS
The hotels, restaurant, and leisure industry consists of hotels, restaurants, casinos, cruise lines, resorts, and
theme parks. Demand is driven by a fairly consistent group of factors throughout the whole of the industry:
personal income levels, total employment, and consumer confidence. In recent years, catastrophic weather,
fear of terrorism, and health epidemics directly impacted the industry in a material way. The industry is
capital, marketing, personnel, energy, maintenance, and technology intensive. Major players include
Intercontinental Hotels Group (IHG), Marriott International Inc. (MAR), Las Vegas Sands (LVS), MGM Resorts
International (MGM), McDonald’s (MCD), and Yum! Brands (YUM).
REVENUE GROWTH AND EBITDA MARGIN*
Revenue Growth (TTM)
Beta
0.41
PLAY
Both tourism and business travel remain vital to the industry, and as a result, U.S. GDP growth, consumer
confidence, and corporate earnings remain vital to the industry’s success. The expansion in capital spending
has been in response to projected demand. However, overdevelopment in certain areas is a concern. Looking
forward, any prolonged low occupancy rates could threaten hotels that are heavily leveraged. As for metrics,
occupancy, average daily room rate, and revenue per available room should be considered when analyzing
the industry or a player within the industry.
Casinos generate roughly $68 billion in revenues annually, and typically, 50% of a casino hotel’s revenues
come from gaming, 20% from hotel rooms, 15% from food and beverages, and 15% from retail stores, shows,
and other entertainment offerings. Expansion and consolidation have been recent trends of note. In 2005
alone, MGM Resorts International purchased Mandalay Resort Group for close to $8 billion and Harrah’s
bought Caesars for over $9 billion. Recent years have also seen a good amount of new casino construction in
the $700 million range as competitors jockey to attract visitors by providing more elaborate offerings. Looking
ahead, further capacity expansion may threaten margins. Meanwhile, most of the industry’s top-line growth
has come from Native American casinos, which at present generate roughly $16 billion in revenues annually.
V
FA
AB
OR
PEER GROUP: Hotels, Restaurants & Leisure
R
VO
FA
-50%
LE
AB
Revenue Growth (TTM)
LE
UN
BWLD
PZZA JACK
TXRH
3%
DIN
CBRL
EAT
CAKE WEN BLMN
6.5%
Earnings Yield (TTM)
Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -6.4% and
413.7%. Companies with NA or NM values do not
appear.
Ticker
CAKE
CBRL
BWLD
TXRH
EAT
WEN
JACK
PZZA
BLMN
DIN
PLAY
Recent
Company Name
Price ($)
CHEESECAKE FACTORY INC
50.57
CRACKER BARREL OLD CTRY STO 147.90
BUFFALO WILD WINGS INC
159.20
TEXAS ROADHOUSE INC
42.57
BRINKER INTL INC
51.12
WENDY'S CO
9.40
JACK IN THE BOX INC
69.29
PAPA JOHNS INTERNATIONAL INC 59.03
BLOOMIN' BRANDS INC
17.15
DINEEQUITY INC
96.96
DAVE & BUSTER'S ENTMT INC
36.66
Market
Cap ($M)
2,487
3,541
3,012
2,986
2,919
2,557
2,403
2,227
2,046
1,796
1,522
Price/
Earnings
21.89
20.69
32.10
31.07
15.59
20.00
23.49
31.23
17.15
17.63
30.81
Net Sales
TTM ($M)
2,100.61
2,869.52
1,812.72
1,807.37
3,099.53
1,870.30
1,542.52
1,637.38
4,377.68
681.10
839.84
Net Income
TTM ($M)
116.52
171.82
95.07
96.89
203.55
161.14
106.20
75.68
127.33
104.92
51.33
The peer group comparison is based on Major Restaurants companies of comparable size.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 2
February 28, 2016
NASDAQ: CAKE
CHEESECAKE FACTORY INC
Sector: Consumer Goods & Svcs Restaurants Source: S&P
Annual Dividend Rate
$0.80
Annual Dividend Yield
1.58%
COMPANY DESCRIPTION
The Cheesecake Factory Incorporated operates
full-service and casual dining restaurants. The company
also produces cheesecakes and other baked products for
foodservice operators, retailers, and distributors. As of
December 8, 2015, it owned and operated 200
full-service casual dining restaurants, including 187
restaurants under The Cheesecake Factory mark, 12
restaurants under the Grand Lux Cafe mark, and 1
restaurant under the RockSugar Pan Asian Kitchen mark
in the United States and Puerto Rico, as well as operated
11 The Cheesecake Factory branded restaurants under
licensing agreements internationally. The company was
founded in 1972 and is based in Calabasas Hills,
California.
CHEESECAKE FACTORY INC
26901 Malibu Hills Road
Calabasas Hills, CA 91301
USA
Phone: 818-871-3000
http://www.thecheesecakefactory.com
Beta
0.41
Market Capitalization
$2.5 Billion
52-Week Range
$44.16-$58.86
Price as of 2/25/2016
$50.57
STOCK-AT-A-GLANCE
Below is a summary of the major fundamental and technical factors we consider when determining our
overall recommendation of CAKE shares. It is provided in order to give you a deeper understanding of our
rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
understanding of our stance on the stock, these factors must be assessed in combination with the stock’s
valuation. Please refer to our Valuation section on page 5 for further information.
FACTOR
SCORE
4.5
Growth
out of 5 stars
weak
Measures the growth of both the company's income statement and
cash flow. On this factor, CAKE has a growth score better than 80% of
the stocks we rate.
strong
4.5
Total Return
out of 5 stars
weak
Measures the historical price movement of the stock. The stock
performance of this company has beaten 80% of the companies we
cover.
strong
5.0
Efficiency
out of 5 stars
weak
Measures the strength and historic growth of a company's return on
invested capital. The company has generated more income per dollar of
capital than 90% of the companies we review.
strong
4.5
Price volatility
out of 5 stars
weak
Measures the volatility of the company's stock price historically. The
stock is less volatile than 80% of the stocks we monitor.
strong
5.0
Solvency
out of 5 stars
weak
Measures the solvency of the company based on several ratios. The
company is more solvent than 90% of the companies we analyze.
strong
3.5
Income
out of 5 stars
weak
Measures dividend yield and payouts to shareholders. The company's
dividend is higher than 60% of the companies we track.
strong
THESTREET RATINGS RESEARCH METHODOLOGY
TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 3
February 28, 2016
NASDAQ: CAKE
CHEESECAKE FACTORY INC
Sector: Consumer Goods & Svcs Restaurants Source: S&P
Annual Dividend Rate
$0.80
Annual Dividend Yield
1.58%
Consensus EPS Estimates² ($)
IBES consensus estimates are provided by Thomson Financial
Beta
0.41
Market Capitalization
$2.5 Billion
52-Week Range
$44.16-$58.86
Price as of 2/25/2016
$50.57
FINANCIAL ANALYSIS
CHEESECAKE FACTORY INC's gross profit margin for the fourth quarter of its fiscal year 2015 has increased
when compared to the same period a year ago. The company has grown sales and net income during the
past quarter when compared with the same quarter a year ago, however, it was unable to keep up with the
growth of the average competitor within its industry.
During the same period, stockholders' equity ("net worth") has increased by 5.75% from the same quarter last
year.
0.61
2.66 E
2.95 E
Q1 FY16
2016(E)
2017(E)
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.
INCOME STATEMENT
Net Sales ($mil)
EBITDA ($mil)
EBIT ($mil)
Net Income ($mil)
Q4 FY15
526.84
60.71
38.80
27.20
Q4 FY14
499.67
55.91
34.79
24.49
Q4 FY15
NA
1,233.35
NA
588.54
Q4 FY14
58.02
1,176.45
77.17
556.51
Q4 FY15
19.64%
11.52%
7.36%
1.70
9.44%
19.79%
Q4 FY14
18.14%
11.18%
6.96%
1.68
8.60%
18.19%
Q4 FY15
NA
NA
NA
NA
Q4 FY14
0.74
0.12
NA
NA
Q4 FY15
49
0.20
0.54
11.94
NA
731,857
Q4 FY14
50
0.17
0.48
11.16
NA
643,325
BALANCE SHEET
Cash & Equiv. ($mil)
Total Assets ($mil)
Total Debt ($mil)
Equity ($mil)
PROFITABILITY
Gross Profit Margin
EBITDA Margin
Operating Margin
Sales Turnover
Return on Assets
Return on Equity
DEBT
Current Ratio
Debt/Capital
Interest Expense
Interest Coverage
SHARE DATA
Shares outstanding (mil)
Div / share
EPS
Book value / share
Institutional Own %
Avg Daily Volume
2 Sum of quarterly figures may not match annual estimates due to
use of median consensus estimates.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 4
February 28, 2016
NASDAQ: CAKE
CHEESECAKE FACTORY INC
Sector: Consumer Goods & Svcs Restaurants Source: S&P
Annual Dividend Rate
$0.80
Annual Dividend Yield
1.58%
RATINGS HISTORY
Our rating for CHEESECAKE FACTORY INC has not
changed since 5/25/2010. As of 2/25/2016, the stock
was trading at a price of $50.57 which is 14.1%
below its 52-week high of $58.86 and 14.5% above
its 52-week low of $44.16.
BUY: $47.32
2 Year Chart
Beta
0.41
Market Capitalization
$2.5 Billion
$60
$55
Price/Earnings
$50
$45
2015
MOST RECENT RATINGS CHANGES
Date
Price
Action
2/25/14
$47.32 No Change
From
Buy
To
Buy
Price reflects the closing price as of the date listed, if available
RATINGS DEFINITIONS &
DISTRIBUTION OF THESTREET RATINGS
1
2
3
4
5
CAKE 21.89
Peers 29.30
• Discount. A lower P/E ratio than its peers can
signify a less expensive stock or lower growth
expectations.
• CAKE is trading at a significant discount to its
peers.
Price/Projected Earnings
1
2
3
premium
4
5
35.29% Hold - We do not believe this stock offers
conclusive evidence to warrant the purchase or sale of
shares at this time and that its likelihood of positive total
return is roughly in balance with the risk of loss.
32.52% Sell - We believe that this stock is likely to
decline by more than 10% over the next 12 months, with
the risk involved too great to compensate for any
possible returns.
Research Contact: 212-321-5381
Sales Contact: 866-321-8726
1
2
3
premium
4
5
Price/Sales
1
2
premium
3
4
5
Price to Earnings/Growth
4
5
discount
1
2
3
premium
4
5
discount
CAKE 0.61
Peers 2.95
• Discount. The PEG ratio is the stock’s P/E divided
by the consensus estimate of long-term earnings
growth. Faster growth can justify higher price
multiples.
• CAKE trades at a significant discount to its peers.
Earnings Growth
1
2
3
4
lower
5
higher
CAKE 16.66
Peers 22.69
• Lower. Elevated earnings growth rates can lead to
capital appreciation and justify higher
price-to-earnings ratios.
• However, CAKE is expected to significantly trail its
peers on the basis of its earnings growth rate.
Sales Growth
discount
CAKE 1.19
Peers 2.96
• Discount. In the absence of P/E and P/B multiples,
the price-to-sales ratio can display the value
investors are placing on each dollar of sales.
• CAKE is trading at a significant discount to its
industry on this measurement.
3
CAKE NA
Peers 14.94
• Neutral. The P/CF ratio is the stock’s price divided
by the sum of the company's cash flow from
operations. It is useful for comparing companies
with different capital requirements or financing
structures.
• Ratio not available.
discount
CAKE 4.24
Peers 12.45
• Discount. A lower price-to-book ratio makes a
stock more attractive to investors seeking stocks
with lower market values per dollar of equity on the
balance sheet.
• CAKE is trading at a significant discount to its
peers.
2
premium
discount
CAKE 17.14
Peers 24.01
• Discount. A lower price-to-projected earnings ratio
than its peers can signify a less expensive stock or
lower future growth expectations.
• CAKE is trading at a discount to its peers.
Price/Book
32.19% Buy - We believe that this stock has the
opportunity to appreciate and produce a total return of
more than 10% over the next 12 months.
1
Price/CashFlow
discount
(as of 2/25/2016)
TheStreet Ratings
14 Wall Street, 15th Floor
New York, NY 10005
www.thestreet.com
Price as of 2/25/2016
$50.57
VALUATION
BUY. CHEESECAKE FACTORY INC's P/E ratio indicates a discount compared to an average of 29.30 for the
Hotels, Restaurants & Leisure industry and a value on par with the S&P 500 average of 21.53. To use another
comparison, its price-to-book ratio of 4.24 indicates a significant premium versus the S&P 500 average of 2.56
and a significant discount versus the industry average of 12.45. The price-to-sales ratio is well below both the
S&P 500 average and the industry average, indicating a discount. Upon assessment of these and other key
valuation criteria, CHEESECAKE FACTORY INC proves to trade at a discount to investment alternatives within
the industry.
premium
2014
52-Week Range
$44.16-$58.86
1
2
3
lower
4
5
higher
CAKE 6.27
Peers 7.04
• Lower. A sales growth rate that trails the industry
implies that a company is losing market share.
• CAKE trails its peers on the basis of sales growth
DISCLAIMER:
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
via the COMPUSTAT® Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the
investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at
http://www.thestreet.com/static/about/terms-of-use.html.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: February 28, 2016
PAGE 5