We came across a bullish thesis on The Cheesecake Factory Incorporated (CAKE) on Value Investing Subreddit Page by TyNads. In this article, we will summarize the bulls’ thesis on CAKE. The Cheesecake Factory Incorporated (CAKE)’s share was trading at $49.65 as of April 29th. CAKE’s trailing and forward P/E were 15.52 and 13.42 respectively according to Yahoo Finance.
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Cheesecake Factory (CAKE) is a deeply misunderstood and undervalued restaurant company trading at levels that reflect an outdated perception of its business. While it’s often dismissed as a declining mall-based chain, the company has quietly transformed itself into a multi-brand restaurant platform with stable profitability, disciplined expansion, and hidden growth assets. In fiscal 2024, CAKE generated $3.5 billion in revenue and $121.4 million in GAAP net income. Beyond its flagship Cheesecake Factory brand, the company owns North Italia and Flower Child—two high-performing, demographic-diversified concepts acquired through Fox Restaurant Concepts. These brands are now central to the company’s future, with North Italia posting 7.6% same-store sales growth in Q4 and Flower Child also reporting positive comps. Both are capital-efficient and poised for expansion, yet still underappreciated by the market. CAKE is currently valued at just $2.49 billion with a forward P/E of 13.6, a trailing P/E of 15.7, and a PEG ratio of 1.14. Its price-to-sales multiple is a modest 0.69, despite strong free cash flow, improving margins, and planned growth across brands. The balance sheet is solid, with manageable debt and a clear path forward—20 new restaurants are expected in 2025, many linked to these high-growth brands. Meanwhile, the legacy Cheesecake Factory concept continues to perform well in high-income markets in the U.S. and internationally. The market is still valuing CAKE based on its past identity, ignoring the strategic shifts and solid financials that now define the business. As the company resumes buybacks and dividend increases, this mispricing presents an attractive entry point for investors. It’s not a flashy tech play, but the combination of cash flow stability, overlooked growth drivers, and valuation disconnect makes Cheesecake Factory a compelling value opportunity with meaningful upside potential.
The Cheesecake Factory Incorporated (CAKE) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 29 hedge fund portfolios held CAKE at the end of the fourth quarter which was 22 in the previous quarter. While we acknowledge the risk and potential of CAKE as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CAKE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
