Cheesecake Factory (NASDAQ:CAKE) Trading Down 6.9% - Should You Sell?

Key Points

• Cheesecake Factory shares fell 6.9% to about $97.91 in midday trading, on volume well below the daily average. The stock’s consensus analyst rating remains “Hold,” with an average price target of $85.47.
• The company recently exceeded quarterly expectations, reporting $1.44 in EPS versus an estimated $1.18 and $1.03 billion in revenue, up 7.7% year over year.
• Cheesecake Factory pays a quarterly dividend of $0.30 per share, yielding approximately 1.2%, while insiders have sold about $22.3 million of stock over the past 90 days.

The Cheesecake Factory Incorporated (NASDAQ:CAKE - Get Free Report) shares dropped 6.9% during mid-day trading on Tuesday . The stock traded as low as $98.93 and last traded at $97.9050. 383,534 shares traded hands during trading, a decline of 73% from the average daily volume of 1,412,187 shares. The stock had previously closed at $105.17.

Analyst Ratings Changes

A number of research analysts recently commented on the company. Bank of America boosted their price target on Cheesecake Factory from $66.00 to $79.00 and gave the company a "neutral" rating in a research note on Thursday, July 2nd. Robert W. Baird raised shares of Cheesecake Factory to a "hold" rating in a report on Monday, August 24th. Weiss Ratings upgraded shares of Cheesecake Factory from a "buy (b-)" rating to a "buy (b)" rating in a research report on Thursday, August 13th. JPMorgan Chase & Co. upped their price target on shares of Cheesecake Factory from $92.00 to $105.00 and gave the stock a "neutral" rating in a report on Wednesday, August 26th. Finally, Argus increased their price target on shares of Cheesecake Factory from $72.00 to $110.00 and gave the stock a "buy" rating in a research report on Thursday, July 30th. One equities research analyst has rated the stock with a Strong Buy rating, five have issued a Buy rating, ten have given a Hold rating and two have given a Sell rating to the company. According to data from MarketBeat, the company presently has a consensus rating of "Hold" and a consensus target price of $85.47.

Cheesecake Factory Stock Down 8.2%

The firm has a 50 day moving average of $100.16 and a two-hundred day moving average of $76.77. The firm has a market capitalization of $4.81 billion, a price-to-earnings ratio of 26.12, a price-to-earnings-growth ratio of 1.68 and a beta of 1.01. The company has a quick ratio of 0.52, a current ratio of 0.59 and a debt-to-equity ratio of 1.08.

Cheesecake Factory (NASDAQ:CAKE - Get Free Report) last issued its earnings results on Tuesday, July 28th. The restaurant operator reported $1.44 EPS for the quarter, topping the consensus estimate of $1.18 by $0.26. The firm had revenue of $1.03 billion during the quarter, compared to the consensus estimate of $999.54 million. Cheesecake Factory had a return on equity of 43.97% and a net margin of 4.61%.The business's quarterly revenue was up 7.7% on a year-over-year basis. During the same quarter in the previous year, the firm earned $1.16 earnings per share. As a group, sell-side analysts anticipate that The Cheesecake Factory Incorporated will post 4.53 EPS for the current fiscal year.

Cheesecake Factory Dividend Announcement

The business also recently disclosed a quarterly dividend, which was paid on Tuesday, August 25th. Investors of record on Tuesday, August 11th were given a dividend of $0.30 per share. This represents a $1.20 dividend on an annualized basis and a yield of 1.2%. The ex-dividend date was Tuesday, August 11th. Cheesecake Factory's dividend payout ratio is currently 32.52%.

Insiders Place Their Bets

In other Cheesecake Factory news, insider Ashley Hanscom sold 3,500 shares of the firm's stock in a transaction that occurred on Thursday, July 30th. The shares were sold at an average price of $100.00, for a total value of $350,000.00. Following the sale, the insider owned 7,541 shares in the company, valued at $754,100. This trade represents a 31.70% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which is available at this link. Also, CFO Matthew Clark sold 68,900 shares of the business's stock in a transaction on Thursday, July 30th. The stock was sold at an average price of $99.30, for a total transaction of $6,841,770.00. Following the sale, the chief financial officer directly owned 45,109 shares in the company, valued at approximately $4,479,323.70. The trade was a 60.43% decrease in their position. The SEC filing for this sale provides additional information. Insiders have sold 213,749 shares of company stock worth $22,301,899 over the last 90 days. Insiders own 8.00% of the company's stock.

Hedge Funds Weigh In On Cheesecake Factory

Institutional investors and hedge funds have recently bought and sold shares of the company. Dimensional Fund Advisors LP raised its stake in Cheesecake Factory by 2.4% during the first quarter. Dimensional Fund Advisors LP now owns 1,242,143 shares of the restaurant operator's stock worth $68,008,000 after buying an additional 29,037 shares during the last quarter. Fisher Asset Management LLC grew its holdings in Cheesecake Factory by 7.2% during the 4th quarter. Fisher Asset Management LLC now owns 503,184 shares of the restaurant operator's stock worth $25,401,000 after acquiring an additional 33,959 shares during the period. Bank of New York Mellon Corp acquired a new stake in Cheesecake Factory during the 2nd quarter worth about $38,020,000. Bamco Inc. NY bought a new position in shares of Cheesecake Factory in the 2nd quarter worth about $35,793,000. Finally, PDT Partners LLC bought a new stake in shares of Cheesecake Factory during the 2nd quarter valued at about $13,743,000. Institutional investors and hedge funds own 94.48% of the company's stock.

About Cheesecake Factory

The Cheesecake Factory Incorporated NASDAQ: CAKE operates full-service casual dining restaurants in the United States. Its flagship Cheesecake Factory restaurants offer an extensive menu of made-to-order dishes spanning American and international cuisines, along with a broad selection of cheesecakes and other desserts.

The company also operates North Italia, an Italian restaurant concept, and restaurants developed through Fox Restaurant Concepts. In addition, its bakery division produces cheesecakes and other baked goods for the company's restaurants, retailers, and other foodservice customers.

Founded in 1978 by David Overton, The Cheesecake Factory began as a bakery business before opening its first restaurant in Beverly Hills, California, in 1978.

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