Cheesecake Factory (NASDAQ:CAKE) is one of the stocks Jim Cramer recently looked at. Noting that the stock was up recently, a caller inquired if it is still a buy. Cramer replied:
“Yes, they really know how to run it. You know, they are just a seasoned practitioner. They know how to do it. I think it’s going to make a run at all-time highs. It sells at 13 times earnings. That’s way too cheap for a very high-quality still growth company, even though it’s up 14% this year. I like it.”
Photo by Yiorgos Ntrahas on Unsplash
Cheesecake Factory (NASDAQ:CAKE) operates and licenses restaurant brands and manages bakery production for both internal use and external distribution. The company also supplies baked goods and cheesecakes to restaurants, retailers, and foodservice operators. Cramer discussed the stock in detail during the July 16, 2025, episode. He said:
“I got another one for you, just kind of popped outta nowhere on my screen, Cheesecake Factory. Yeah, it’s up over 31% year to date, trouncing the 6.5% gain in the S&P 500 over the same period, Cheesecake Factory. So once again, I’m asking what the heck is going on here… It’s infamous for one thing, its ridiculously large menu…
…Basically, Cheesecake Factory covers all the bases, making it a good choice when you’re looking to go out with a group of friends… As analyst at Goldman Sachs put it, this diverse menu eliminates the ‘no vote’ when deciding where to go out to eat… The value proposition here is clear. If there’s one thing the winners in the restaurant space have in common right now, is that they offer a great value proposition…And look, even if you’re not a fan, it’s hard to argue with Cheesecake Factory’s annualized unit volume of $12.5 million, and that’s what they make per share, and it’s an obscenely large number for the restaurant industry…
Cheesecake Factory’s also changed the menu to offer their customers better value, something that they’re planning to stick with going forward. The result, when Cheesecake Factory reported its most recent quarter, at the beginning of May, they delivered impressive unit-level margins of 16.6%. Wall Street was only looking for 15.8%… Adding new locations will be meaningful to the overall earnings. This comes out to 7% unit growth overall, which is enough to make this a pretty compelling restaurant growth story.
So I like the company, but where do I come down on the stock right now? This thing has been red hot. Although, with Cheesecake Factory set to report earnings the Tuesday after next, it might be wise just to wait and see the latest results. While performance has been strong, management remains conservative in its outlook, so the stock might sell off even if they have a real good quarter. Despite having a top and bottom line beat and these impressive margins when they last reported, the stock slipped the day after earnings, thanks to management’s commentary…
So let me give you the bottom line on Cheesecake: Even though management’s been pretty conservative in their outlook throughout this rally, I don’t know if it would be prudent for me to tell you to buy Cheesecake Factory ahead of the quarter… There’s a lot to like about this story, but let’s see how they did… last quarter. As much as I want to say, let them eat cake, maybe let this one cool off before you take a bite.”
It is worth noting that the company’s stock is down around 7.5% from July 16, 2025, levels, when the above comment was aired.
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Disclosure: None. This article is originally published at Insider Monkey.
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