Shares of restaurant company Cheesecake Factory (NASDAQ:CAKE)
fell 3.4% in the afternoon session after investment firm William Blair lowered its full-year earnings forecast. The investment firm William Blair revised its earnings per share (EPS) estimate down to $3.68 for fiscal year 2025, a slight reduction from its previous forecast of $3.69. This new projection also fell just below the consensus analyst expectation of $3.71 per share. The downward revision, though minor, signaled potential concerns about the restaurant operator's future profitability. Compounding the negative sentiment were jitters ahead of the company's second-quarter earnings announcement, scheduled for late July. Analysts had already indicated expectations for a year-over-year decline in earnings for the quarter, which likely contributed to investor caution.
Restaurants increase convenience and give many people a place to unwind. But the side dish is that they’re quite difficult to operate because high inventory and labor costs generally lead to thin margins at the store level.
This leaves little room for error if demand dries up, and it seems like the market has some reservations as the industry’s returns were flat over the past six months while the S&P 500 was up 5.4%.
When Wall Street turns bearish on a stock, it’s worth paying attention.
These calls stand out because analysts rarely issue grim ratings on companies for fear their firms will lose out in other business lines such as M&A advisory.
While strong cash flow is a key indicator of stability, it doesn’t always translate to superior returns.
Some cash-heavy businesses struggle with inefficient spending, slowing demand, or weak competitive positioning.
A number of stocks jumped in the afternoon session after the major indices rebounded (Nasdaq +2.0%, S&P 500 +1.5%) as President Trump postponed the planned 50% tariff on European Union imports, shifting the start date to July 9, 2025.
Restaurants increase convenience and give many people a place to unwind. Still, their demand can ebb and flow with the broader economy because consumers can always cook meals at home when times are tough, and the market seems to be baking in a downturn for the industry -
over the past six months, it has pulled back by 9.1%. This performance was disheartening since the S&P 500 held steady.
Earnings results often indicate what direction a company will take in the months ahead. With Q1 behind us, let’s have a look at The Cheesecake Factory (NASDAQ:CAKE) and its peers.
Restaurant company Cheesecake Factory (NASDAQ:CAKE) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 4% year on year to $927.2 million. Its non-GAAP profit of $0.93 per share was 13.6% above analysts’ consensus estimates.
Restaurant company Cheesecake Factory (NASDAQ:CAKE) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 4% year on year to $927.2 million. Its non-GAAP profit of $0.93 per share was 13.9% above analysts’ consensus estimates.
Goldman Sachs flags ongoing risks for U.S. restaurants in 2025, with macro uncertainty, weak consumer sentiment, and tariff pressures weighing on growth.
Commodity trends shifted in Q1, with deflation in grains but a spike in coffee prices. Restaurant stocks lag historic EPS multiples, and investors now eye April demand and potential tariff impacts.
