CAKE

Cheesecake Factory Inc.

Consumer


Presented:03/19/2020
Price:$20.51
Cap:$0.92B
Current Price:$40.59
Cap:$2.06B

Presented

Date03/19/2020
Price$20.51
Market Cap$0.92B
Ent Value$3.27B
P/E Ratio7.18x
Book Value$12.77
Div Yield6.87%
Shares O/S44.96M
Ave Daily Vol1,332,370
Short Int28.45%

Current

Price$40.59
Market Cap$2.06B
Cheesecake Factory, Inc. engages in the operation of restaurant chains. It operates through The Cheesecake Factory, North Italia, Other FRC, and Other segments. The Cheesecake Factory segment offers appetizers, pizza, seafood, steaks, chicken, burgers, small plates, pastas, salads, sandwiches and omelettes, and a selection of gluten-free items. The North Italia segment specializes in Italian cuisine. The Other FRC segment includes brands acquired from Fox Restaurant Concepts. The Other segment comprises of the Flower Child brand, along with other businesses. The company was founded by David M. Overton, Oscar Overton, and Evelyn Overton in 1972 and is headquartered in Calabasas Hills, CA.

Publicly traded companies mentioned herein: Cheesecake Factory Inc (CAKE)

Highlights

The presenter is short shares of Cheesecake Factory (CAKE), in part as he views CAKE’s model as a tired, declining concept that is less popular with younger generations. With 3 consecutive years of declines in operating income, he expects this trend to continue through the end of Q2’20, and obviously will be exacerbated in the near-mid term from the impact of the COVID-19. The risk/reward favors bears and he sees potential for the stock to trade down substantially by Q4 of next year (2021), subject to liquidity issues playing out. 

CAKE is an American restaurant company and distributor of cheesecakes that currently operates ~300 restaurants nationwide. Prior to the effects of the virus on QSRs, CAKE had also faced declining operating income for 3 years in a row: $153MM (2017), $119MM (2018) and $104MM in (2019). 

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