Cheesecake Factory: Valuation Beginning To Improve

Summary

• Cheesecake Factory released its Q3 results in early November, reporting revenue growth of 29% on a two-year basis, helped by moderate comp sales growth and steady unit growth.
• The company also noted that while the company continues to see pockets of staffing challenges, it isn't putting much of a dent in sales, unlike some other brands.
• After a more than 40% decline from the stock's highs, CAKE is becoming more reasonably valued, but there are risks into 2022, with commodity inflation and staffing trends being unpredictable.
• At a current share price of $39.50, I don't see enough margin of safety, but I would view pullbacks below $34.50 as low-risk buying opportunities.

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Last year was certainly a stock-picker's market, which couldn't be more true in the restaurant sector. This is because while the industry group posted a positive 2021 return, many names ended the year in negative territory. Cheesecake Factory (NASDAQ:

Analyst’s Disclosure:I/we have a beneficial long position in the shares of QSR either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: Taylor Dart is not a Registered Investment Advisor or Financial Planner. This writing is for informational purposes only. It does not constitute an offer to sell, a solicitation to buy, or a recommendation regarding any securities transaction. The information contained in this writing should not be construed as financial or investment advice on any subject matter. Taylor Dart expressly disclaims all liability in respect to actions taken based on any or all of the information on this writing.