The Cheesecake Factory Incorporated (CAKE) recently reported better-than-expected fourth-quarter 2009 results on the heels of effective cost management. Cost savings of over $7 million were realized during the quarter.
 
The quarterly earnings of 28 cents a share outstripped the Zacks Consensus Estimate of 24 cents and surged 86.7% from 15 cents delivered in the prior-year quarter. The boost was helped by a 5.7% drop in cost of sales, a 3.3% slide in labor expenses, and a 2.1% dip in other operating costs and expenses.
 
Management now expects first-quarter 2010 earnings between 23 cents and 25 cents a share. The current Zacks Consensus Estimate for the first quarter is 23 cents. Over the last 30 days, the Zacks Consensus Estimate has shown a substantial increase of 15% where 11 out of 28 analysts covering the stock raised their estimates.
 
The company’s earnings surprise history for the last four quarters (including the fourth-quarter), when compared to the Zacks Consensus Estimate, varies between 12.5% and 70%, with the average being 33.1%.
 
For fiscal year 2010, earnings are expected in the range of $1.16 to $1.24 per share. The current Zacks Consensus Estimate for the year is $1.18. In the last 30 days, the Zacks Consensus Estimate has climbed 4.4% as 15 out of 28 analysts covering the stock have raised their estimates.
 
On a reported basis, including one-time items, Cheesecake posted a net loss of $13,000 or nil per share for the quarter compared to net earnings of $7.1 million or 12 cents a share delivered in the prior-year quarter.
 
Cheesecake’s top-line showed a sluggish growth of 0.1% year-over-year to $400.6 million. Comparable-store sales fell 0.9% in the quarter compared to a decline of 7.1% in the year-ago quarter. By concept, comps dipped 0.7% and 3.9% at the Cheesecake Factory and Grand Lux Cafe, respectively. For first-quarter 2010, management expects comps to be flat to positive 1%.
 
Cheesecake, the operator of 161 full-service, casual dining restaurants, said it realized cost savings of $27 million during fiscal year 2009, generated free cash flow of $160 million and lowered its debt by $175 million.
 
Restaurants in the casual dining segment have been experiencing sagging comps and declining traffic with cash-strapped consumers shifting to low-priced dining options or eating at home. Other operators in the segment are California Pizza Kitchen Inc. (CPKI), Red Robin Gourmet Burgers Inc. (RRGB), Cosi Inc. (COSI) and Brinker International Inc. (EAT).

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Read the full analyst report on “EAT”
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