Analyst: Sally Jiao, BCom. ‘23
[email protected] Equity Research Canada The Cheesecake Factory Inc. (NASDAQ: CAKE) Price Target CAD$ 25.32 Consumer Discretionary – Restaurants Rating Buy A Sweet and Cheesy Deal Share Price (Mar. 27 Close) CAD$ 16.18 March 29, 2019 Total Return 59% The Cheesecake Factory Inc. (The Company) is a leading American Key Statistics chain of casual dining restaurants. Having recently completed a 52 Week H/L $51.15/$14.52 complex acquisition of Fox Restaurant Concepts (FRC), the Factory now owns 294 restaurants under brands including the Cheesecake Market Capitalization $0.90B Factory® and North Italia. In addition, it holds licensing Average Daily Trading Volume 0.8M agreements for 24 international Cheesecake Factory® restaurants. Net Debt $1.61B Thesis Enterprise Value $2.27B Over the past decade, the Cheesecake Factory has managed to Net Debt/EBITDA 8.4x establish itself as a household name in the American dining Diluted Shares Outstanding 44.6M industry. The Company’s ability to continuously outperform the casual dining market as evidenced by the Knapp Track Index Free Float 92.2% demonstrates that it is capable of maintaining a leadership Dividend Yield 3.30% position in the industry and keep up with emerging trends.. WestPeak’s Forecast Furthermore, the accelerated growth potential brought on by the 2018A 2019A 2020E FRC acquisition is largely being undervalued by the market as it has not taken into consideration the future restaurant concepts Revenue $2.33B $2.48B $2.68B that can be developed as a result of the joint partnership. EBITDA $215M $192M $220M Net Income $99M $127M $105M Drivers EPS $2.14 $2.90 $2.40 With the recent acquisition of Fox Restaurant Concepts (FRC), the Company will be able to expand into growing and previously P/E 5.0x 5.7x 5.4x untapped markets.