The Cheesecake Factory Incorporated (CAKE) Hit a 52 Week High, Can the Run Continue?

Have you been paying attention to shares of Cheesecake Factory (CAKE)? Shares have been on the move with the stock up 36.1% over the past month. The stock hit a new 52-week high of $106.44 in the previous session. Cheesecake Factory has gained 109.7% since the start of the year compared to the 7.8% move for the Zacks Retail-Wholesale sector and the 1.2% return for the Zacks Retail - Restaurants industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, having beaten the Zacks Consensus Estimate in each of the last four quarters. In its last earnings report on July 28, 2026, Cheesecake Factory reported EPS of $1.44 versus consensus estimate of $1.17.

For the current fiscal year, Cheesecake Factory is expected to post earnings of $4.43 per share on $4.01 in revenues. This represents a 17.51% change in EPS on a 6.81% change in revenues. For the next fiscal year, the company is expected to earn $4.93 per share on $4.27 in revenues. This represents a year-over-year change of 11.29% and 6.45%, respectively.

Valuation Metrics

While Cheesecake Factory has moved to its 52-week high in the recent past, investors need to be asking, what is next for the company? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Cheesecake Factory has a Value Score of D. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 23.9X current fiscal year EPS estimates, which is a premium to the peer industry average of 20.9X. On a trailing cash flow basis, the stock currently trades at 18.1X versus its peer group's average of 11.1X. Additionally, the stock has a PEG ratio of 1.91. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to consider the stock's Zacks Rank, as this is even more important than the company's VGM Score. Fortunately, Cheesecake Factory currently has a Zacks Rank of #1 (Strong Buy) thanks to rising earnings estimates.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Cheesecake Factory meets the list of requirements. Thus, it seems as though Cheesecake Factory shares could have a bit more room to run in the near term.

How Does CAKE Stack Up to the Competition?

Shares of CAKE have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? One industry peer that looks good is Yum China (YUMC). YUMC has a Zacks Rank of #2 (Buy) and a Value Score of B, a Growth Score of B, and a Momentum Score of D.

Earnings were strong last quarter. Yum China beat our consensus estimate by 1.45%, and for the current fiscal year, YUMC is expected to post earnings of $2.95 per share on revenue of $12.95 billion.

Shares of Yum China have gained 13.4% over the past month, and currently trade at a forward P/E of 16.23X and a P/CF of 12.56X.

The Retail - Restaurants industry may rank in the bottom 77% of all the industries we have in our universe, but there still looks like there are some nice tailwinds for CAKE and YUMC, even beyond their own solid fundamental situation.

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

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