Shareholders of The Cheesecake Factory Incorporated (NASDAQ:CAKE) will be pleased this week, given that the stock price is up 12% to US$37.65 following its latest first-quarter results. Cheesecake Factory reported US$891m in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$0.68 beat expectations, being 2.9% higher than what the analysts expected. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for Cheesecake Factory

Taking into account the latest results, the current consensus from Cheesecake Factory's 18 analysts is for revenues of US$3.61b in 2024. This would reflect a credible 4.3% increase on its revenue over the past 12 months. Per-share earnings are expected to surge 51% to US$3.15. Before this earnings report, the analysts had been forecasting revenues of US$3.62b and earnings per share (EPS) of US$3.08 in 2024. The analysts seems to have become more bullish on the business, judging by their new earnings per share estimates.

The analysts have been lifting their price targets on the back of the earnings upgrade, with the consensus price target rising 5.9% to US$38.19. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. The most optimistic Cheesecake Factory analyst has a price target of US$47.00 per share, while the most pessimistic values it at US$29.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Of course, another way to look at these forecasts is to place them into context against the industry itself. We would highlight that Cheesecake Factory's revenue growth is expected to slow, with the forecast 5.7% annualised growth rate until the end of 2024 being well below the historical 11% p.a. growth over the last five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 9.7% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than Cheesecake Factory.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Cheesecake Factory following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that in mind, we wouldn't be too quick to come to a conclusion on Cheesecake Factory. Long-term earnings power is much more important than next year's profits. We have forecasts for Cheesecake Factory going out to 2026, and you can see them free on our platform here.

Plus, you should also learn about the 3 warning signs we've spotted with Cheesecake Factory .

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