Earnings Preview: Cheesecake Factory

The Cheesecake Factory (CAKE) is expected to report Q3 earnings Thursday after the close with a conference call scheduled for 5:00 pm ET.

Guidance

Analysts are looking for a profit of 27c on revenue of $405.64M. The consensus range is 25c to 29c for EPS, and revenue of $395.4M to $410M, according to First Call.

In an October 16 regulatory filing, Cheesecake Factory said it is temporarily suspending its stock repurchase authorization to conserve cash "in order to maintain maximum flexibility in its capital decisions."

Analyst Views

KeyBanc Capital Markets analyst Lynne Collier said in note to investors that the move was the right one for the company, given the tightening of the credit markets; Collier said she does not expect repurchases to begin again until at least 2010.

Baird analyst David Tarantino agreed, saying that the decision was "appropriate" given the uncertain economy and instability in the credit markets. Between the faltering economy, soaring food and gas prices, limited credit, slumping home prices and worries about jobs, shoppers remain unnerved and have cut back spending on discretionary items, including going out to eat.

In an October 21 note, Cowen downgraded The Cheesecake Factory to Neutral from Outperform due to deceleration across the entire casual dining sector in October and an unlikely Q4 recovery.