The restaurant chain was among the most active names on the Nasdaq Monday.

Outperform - Price 8.78 on Jan. 20
by Raymond James

CAKE announced industry veteran W. Douglas Benn as chief financial officer....Benn has 20-plus years' industry experience; he most recently served as CFO of RARE Hospitality [before it was] acquired by Darden Restaurants....We're encouraged....Earnings per share for '07 were $1.03; '08- and '09-estimated EPS are 83 cents. Expected price/earnings: 10.6 times. Return on equity: 14%. Market cap: $658 million.

Because she does what she's supposed to do.

While the U. S. economy is now officially in recession, making consumer-dependent companies "a big, scary area," Galluccio believes some specialty retailers and consumer-goods outfits with solid niche businesses or high-quality products are priced to buy and hold. That's why the portfolio manager has put hammered names like J. Crew Group (JCG), department store Saks (SKS), jeweler Tiffany (TIF) and Cheesecake Factory (CAKE) in his portfolio.

The restaurant chain was among the most active names on the Nasdaq Monday.

17.4

14.7

14.7

Great business success.

The unique, casual dining restaurant recently increased its stock buyback plan by $10 million. Now, the Calabasas Hills, Calf.-based company has about 17.5 million shares available for repurchase.

In order to finance the repurchase, the company said they expect to generate between $80 and $90 million in free cash flow throughout 2008. The company, who operates 139 restaurants, is also negotiating a deal with its lenders to increase its credit capacity by $50 million to $100 million to also help fund the buyback.

In other news, the company increased the size of its board from 6 members to 8 members and elected Allen Bernstein and Alexander Cappello to fill the newly created spots, beginning Feb 12.

"The extension of our repurchase authorization reflects our confidence in The Cheesecake Factory and demonstrates our ongoing commitment to increase shareholder value," said David Overton, Chairman and CEO.

On February 5th, CAKE reported full year 2007 earnings of $1.04 per share. This result was in-line with the consensus of the 20 analysts following the company and beat last year's results by 2.0%. However, fourth-quarter earnings of $15.2 million, or 22 cents a share missed analysts' estimates of 26 cents a share. Revenue for the quarter rose 13% to $406.3 million, but fell short of the $413 million forecast. The company said bad weather conditions that resulted in lower-then-expected restaurant traffic severely hurt the restaurants same-store sales.

Analyst Greg Ruedy from Stephens Investment Bankers considers The Cheesecake Factory a "best-of-breed" casual dining operator and maintains his overweight rating on the stock. Since CAKE missed fourth quarter expectations, he admits the company is not immune to the challenges in the consumer and commodity environment, but he feels their 2008 business strategy is best suited to withstand it. The company took down the number of restaurant openings in 2008 from 17 to 7-9, with the extra cash flow going towards share repurchases. "And the 2008 menu pricing plans are favorable to protect the brand and the consumer," added Ruedy.

very good restaurant

Wish I had the nerve to short it.

From Barron's 7-2-07:

"In retailing, most people look at the demand side. I always focus on the supply side. Look at casual-dining restaurant companies like P.F. Chang [PFCB], Cheesecake Factory [CAKE], Red Robin Gourmet [RRGB], Buffalo Wild Wings [BWLD] and California Pizza Kitchen [CPKI]. They're growing 15% to 40% per year and generally have P/E multiples of 20 to 30. By my calculation, based on the rate they are opening restaurants, Americans are going to have to eat 28 meals a week out of the house by 2011 to justify these multiples. So unless Americans are going to get very fat or very rich or their houses are going to burn down, that's unlikely to happen."

Restaurants are too risky.D

lost some money here