CAKE to Post Q3 Earnings: What's in the Cards for the Stock?

The Cheesecake Factory Incorporated CAKE is scheduled to report third-quarter fiscal 2025 results on Oct. 28.

CAKE’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with an average surprise being 15.2%.

Trend in the Estimate Revision of CAKE

The Zacks Consensus Estimate for fiscal third-quarter earnings per share (EPS) is pegged at 60 cents, indicating a rise of 3.5% from 58 cents reported in the year-ago quarter.

The Cheesecake Factory Incorporated Price and EPS Surprise

The Cheesecake Factory Incorporated price-eps-surprise | The Cheesecake Factory Incorporated Quote

For revenues, the consensus mark is pegged at nearly $912.9 million. The metric suggests a rise of 5.5% from the year-ago quarter’s figure.

Let’s take a look at how things have shaped up in the quarter.

Factors Likely to Shape Cheesecake Factory’s Quarterly Results

Cheesecake Factory’s fiscal third-quarter 2025 performance is likely to have benefited from steady demand trends, disciplined cost management and sustained brand relevance. Consistent guest traffic, aided by strategic menu innovations such as the introduction of “Bowls” and “Bites,” likely supported comparable sales growth during the quarter. Continued engagement from the Cheesecake Rewards program is also expected to have contributed to top-line performance. The company anticipates fiscal third-quarter total revenues in the range of $905 million to $915 million.

Strong contributions from North Italia Restaurants and Other FRC are likely to have aided the company’s performance in the fiscal third quarter. Our model predicts fiscal third-quarter revenues from North Italia Restaurants and Other FRC to rise 14.6% and 34.3% year over year to $82.3 million and $90 million, respectively.

CAKE’s profitability is expected to have remained healthy, backed by operational excellence, improved labor retention and favorable commodity costs. Efforts to optimize staffing levels, enhance labor productivity and manage food inflation likely supported restaurant-level margin stability. With four-wall margins reaching 18.5% in the prior quarter, the company remains well-positioned within its long-term margin target range of 16% to 18%. Management’s focus on driving efficiency while maintaining menu value and guest satisfaction has likely aided sequential margin resilience in the quarter to be reported.

However, modest wage inflation, higher medical costs and increased pre-opening expenses tied to new restaurant openings may have partially offset these gains. Additionally, softer discretionary spending and cautious consumer sentiment could have limited upside in traffic trends. Our model predicts fiscal third-quarter labor expenses to rise 5.5% year over year to $328.2 million.

What Our Model Says About CAKE Stock

Our proven model predicts an earnings beat for Cheesecake Factory this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is exactly the case here.

CAKE’s Earnings ESP: Cheesecake Factory has an Earnings ESP of +3.85%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

CAKE’s Zacks Rank: The company currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks With the Favorable Combination

Here are a few other stocks from the Zacks Retail-Wholesale sector, which, according to our model, also have the right combination of elements to post an earnings beat this reporting cycle.

Dutch Bros Inc. BROS currently has an Earnings ESP of +6.93% and a Zacks Rank of 1.

In the to-be-reported quarter, Dutch Bros’ earnings are expected to increase 6.3%. Dutch Bros’ earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 91.9%.

Brinker International, Inc. EAT currently has an Earnings ESP of +3.60% and a Zacks Rank of 3. 

In the to-be-reported quarter, Brinker’s earnings are expected to register an 84.2% year-over-year surge. Brinker's earnings surpassed estimates in each of the trailing four quarters, with an average beat of 25.7%.

Darden Restaurants, Inc. DRI has an Earnings ESP of +4.64% and a Zacks Rank of 3 at present.

In the to-be-reported quarter, Darden’s earnings are expected to register a 3.5% year-over-year increase. Darden’s earnings beat estimates in one out of the trailing four quarters, and missed thrice, with an average miss of 0.54%.

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This article originally published on Zacks Investment Research (zacks.com).

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