Cheesecake Factory (CAKE): Revisiting Valuation After a 21.6% 90-Day Share Price Pullback

Cheesecake Factory (CAKE) shares have been drifting after a choppy few months, and that pullback has some investors wondering whether the current price fairly reflects its steady revenue and earnings growth.

See our latest analysis for Cheesecake Factory.

The stock’s recent weakness stands in contrast to its solid three year total shareholder return of 64.61 percent. This suggests the 21.64 percent 90 day share price pullback may reflect shifting sentiment more than a broken story at a 47.86 dollars share price.

If Cheesecake Factory’s recent volatility has you rethinking where growth might come from next, this could be a good moment to explore fast growing stocks with high insider ownership.

With revenues still growing and Wall Street targets sitting well above today’s price, investors face a key question: Is Cheesecake Factory quietly undervalued right now, or is the market already pricing in its next stage of growth?

Most Popular Narrative Narrative: 35.2% Undervalued

Cheesecake Factory’s narrative fair value of 73.83 dollars sits well above the 47.86 dollars last close, framing a sizable gap investors will want to understand.

Overall the potential that CAKE holds over the next 10 years makes me very eager to continue to buy into this company. As I see them as a potential growth company; they also hold in my opinion as a Value/Dividend company as well; which makes them even more attractive.

Read the complete narrative.

According to Zwfis, this upside thesis leans heavily on double digit growth assumptions, improving profitability and a richer future earnings multiple that today’s share price does not yet reflect.

Result: Fair Value of $73.83 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, slowing comparable sales and execution risk around aggressive new concept expansion could quickly challenge assumptions about Cheesecake Factory’s long term growth runway.

Find out about the key risks to this Cheesecake Factory narrative.

Another View: Cash Flows Tell a Different Story

While narratives and market multiples point to upside for Cheesecake Factory, our DCF model is more cautious, suggesting fair value closer to 29.81 dollars, below the current 47.86 dollars price. If long term cash flows are softer than hoped, today’s entry point could carry more downside than it seems.

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Cheesecake Factory for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 928 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Cheesecake Factory Narrative

If you see the story differently or prefer to dig into the numbers yourself, you can build a full narrative in just a few minutes: Do it your way.

A great starting point for your Cheesecake Factory research is our analysis highlighting 5 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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