The Cheesecake Factory
CAKE
$109.07
-3.80%
The Cheesecake Factory Inc. is a restaurant company that owns and operates casual dining brands, including The Cheesecake Factory, North Italia, Flower Child, and others within its Fox Restaurant Concepts portfolio, primarily across the United States and Canada. As a leading player in the casual dining segment, it differentiates itself through its extensive menu, bakery division, and multi-brand strategy. The current investor narrative centers on the company's impressive stock rally, driven by strong operational performance, successful brand diversification, and robust growth in its North Italia and other FRC segments, despite broader concerns about consumer spending in the restaurant industry.…
CAKE
The Cheesecake Factory
$109.07
CAKE 12-Month Price Forecast
Wall Street consensus
Most Wall Street analysts maintain a constructive view on The Cheesecake Factory's 12-month outlook, with a consensus price target around $90.80 and implied upside of -16.8% versus the current price.
Average Target
$90.80
0 analysts
Implied Upside
-16.8%
vs. current price
Analyst Count
—
covering this stock
Price Range
$60 - $104
Analyst target range
Analyst coverage is substantial, with 15 analysts covering the stock. The consensus recommendation is 'Hold', with a mean rating of 2.68 (where 1 is Strong Buy and 5 is Sell). The average target price is $90.80, which implies a -19.9% downside from the current price of $113.38. The distribution includes 4 Buy ratings, 8 Hold ratings, and 3 Sell ratings, indicating a cautious stance. The target price range is wide, from a low of $60.00 to a high of $104.00, reflecting high uncertainty. The high target of $104.00 is still below the current price, suggesting that even the most bullish analysts see limited upside. Recent ratings actions have been mixed: Oppenheimer and Mizuho maintain Outperform, Citigroup maintains Buy, but Stephens & Co. downgraded from Overweight to Equal Weight, and Morgan Stanley and Barclays have Underweight ratings. The wide spread and recent downgrades signal that analysts are skeptical of the stock's rapid appreciation, and the consensus implies the stock is overvalued at current levels.
Bulls vs Bears: CAKE Investment Factors
The bull case rests on solid revenue growth, undervaluation relative to peers, and strong cash generation, while the bear case is driven by the stock's overextension, cautious analyst sentiment, and high leverage. Currently, the bearish evidence is stronger because the stock has rallied far beyond analyst targets, and the valuation gap on PE/PS may not justify the recent price surge. The key tension is whether the company's growth and operational improvements can justify the current price, or if the market has overpriced the stock, leading to a correction.
Bullish
- Strong Revenue Growth: Q1 2026 revenue grew 5.57% YoY to $978.8M, with consistent sequential growth from $865.5M in Q3 2024. This steady expansion is driven by the core Cheesecake Factory brand and high-growth concepts like North Italia.
- Undervalued on PE and PS: Trailing PE of 15.78x is 28% below the industry average of 22x, and PS of 0.62x is 59% below the industry average of 1.5x. This suggests the market is not fully pricing in the company's earnings power.
- High ROE and Cash Flow: ROE is a robust 34.0%, and free cash flow for Q1 2026 was $52.2M, with TTM FCF of $171.2M. This strong cash generation supports debt service and dividend payments despite a high debt-to-equity ratio.
- Improving Operating Margin: Operating margin improved to 5.62% in Q1 2026 from 3.46% in Q4 2025, indicating better cost control and operational efficiency. This trend, if sustained, could boost profitability.
Bearish
- Stock Overextended After Rally: The stock has surged 93.25% in 6 months and 78.92% in 1 year, now trading at 95.7% of its 52-week range. This rapid appreciation has pushed the price above the average analyst target of $90.80, implying a -19.9% downside.
- Analyst Consensus is Hold: With a mean rating of 2.68 (Hold) and 3 Sell ratings, analysts are cautious. The average target of $90.80 is below the current price, and even the high target of $104.00 is below it, signaling limited upside.
- High Debt-to-Equity Ratio: Debt-to-equity is 7.93, which is very high and indicates significant leverage. This increases financial risk, especially if interest rates rise or cash flow weakens.
- Negative PEG and Forward PE: The forward PE of 22.99x is higher than the trailing PE of 15.78x, implying expected earnings decline. The negative PEG ratio (-4.70) suggests the market is not pricing in growth, which could lead to de-rating.
CAKE Technical Analysis
The stock is in a powerful uptrend, with a 1-year price change of +78.92% and a 6-month change of +93.25%. The current price of $113.38 sits at 95.7% of its 52-week range (low $43.07, high $118.46), indicating strong momentum and near-term overextension. This positioning near the highs suggests bullish sentiment, but also raises the risk of a pullback as the stock approaches its 52-week high.
Beta
1.00
1.00x market volatility
Max Drawdown
-37.0%
Largest decline past year
52-Week Range
$43-$118
Price range past year
Annual Return
+73.2%
Cumulative gain past year
| Period | CAKE Return | S&P 500 |
|---|---|---|
| 1m | +27.2% | +4.0% |
| 3m | +86.5% | +5.3% |
| 6m | +70.2% | +12.6% |
| 1y | +73.2% | +20.1% |
| ytd | +106.5% | +13.3% |
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CAKE Fundamental Analysis
Revenue growth has been solid, with the most recent quarter (Q1 2026) showing revenue of $978.8 million, up 5.57% year-over-year. This growth is driven by the Cheesecake Factory segment ($690.5 million) and strong contributions from North Italia ($89.5 million) and Other FRC ($104.5 million). The multi-quarter trend shows consistent expansion, with revenue rising from $865.5 million in Q3 2024 to $978.8 million in Q1 2026, indicating a steady growth trajectory. The company's profitability is healthy, with a net income of $49.5 million in Q1 2026 and a net margin of 5.06%. Gross margin, however, was unusually low at 15.78% in Q1 2026, down from 78.4% in Q4 2025, likely due to a one-time cost adjustment; the trailing twelve-month gross margin is 78.3%, which is typical for the industry. Operating margin improved to 5.62% in Q1 2026 from 3.46% in Q4 2025, showing operational efficiency. The balance sheet shows a high debt-to-equity ratio of 7.93, but the company generates strong cash flow, with free cash flow of $52.2 million in Q1 2026 and $171.2 million on a trailing twelve-month basis. ROE is robust at 34.0%, and the current ratio of 0.59 indicates tight liquidity, but the company's cash flow generation supports its operations and dividend payments.
Quarterly Revenue
$978833000.0B
2026-03
Revenue YoY Growth
+5.6%
YoY Comparison
Gross Margin
15.8%
Latest Quarter
Free Cash Flow
$171158000.0B
Last 12 Months
Revenue & Net Income Trends (2 Years)
Revenue Breakdown
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Valuation Analysis: Is CAKE Overvalued?
Given the positive net income, the PE ratio is the primary valuation metric. The trailing PE is 15.78x, while the forward PE is 22.99x, implying the market expects earnings to decline or that the forward estimates are conservative. The gap suggests investors are pricing in lower future earnings growth, which is unusual given the recent revenue growth. Compared to the industry, the stock trades at a discount on a PS basis (0.62x vs. industry average of 1.5x, a 59% discount) and on a PE basis (15.78x vs. industry average of 22x, a 28% discount), indicating the market is undervaluing the company relative to peers. Historically, the PE ratio has ranged from 8.6x to 32.4x over the past few years, with the current 15.78x near the lower end of that range, suggesting the stock is undervalued relative to its own history. The PEG ratio is negative (-4.70), which is not meaningful due to negative earnings growth expectations, but the low PE and PS ratios indicate potential value.
PE
15.8x
Latest Quarter
vs. Historical
Mid-Range
5-Year PE Range 9x~22x
vs. Industry Avg
N/A
Industry PE ~N/A*
EV/EBITDA
19.8x
Enterprise Value Multiple
Investment Risk Disclosure
Financial risks are significant due to a high debt-to-equity ratio of 7.93, which amplifies vulnerability to rising interest rates or cash flow disruptions. Although the company generates positive free cash flow ($171.2M TTM), the current ratio of 0.59 indicates tight liquidity, and the low gross margin in Q1 2026 (15.78%) suggests potential cost pressures. If revenue growth slows or margins compress, the company may struggle to service its debt, leading to financial distress. Market risks include valuation compression, as the stock trades at a premium to its historical PE range (current 15.78x vs. historical low of 8.6x) and above analyst targets. The beta of 1.003 indicates high correlation with the market, so a broader market downturn could hit the stock hard. Competitive pressures in the casual dining sector, such as rising labor and food costs, could also erode margins. In a worst-case scenario, if the company faces a consumer spending slowdown, rising costs, and a market correction, the stock could fall to its 52-week low of $43.07, representing a -62% decline from the current price of $113.38. This would be a severe loss for investors, especially given the stock's recent volatility and high leverage.