Is a Big Bang Coming for This Stock?
Shares of this restaurant chain have doubled in a year, and revenue is growing at a tech-company pace. But some of that growth is just an echo of the COVID trough, and the real reason behind the rally has only been in place for two quarters. On October 27, we’ll find out if it lasts.
Key points
The stock has jumped 119% in a year, but the 13.6% annual revenue growth figure starts from a different year than you might expect
The market is paying 31 times earnings for a company whose turnaround is only two quarters old
The concept acquired as the main growth engine has lost guests for six quarters in a row
The only brand people visit of their own accord accounts for just 5.5% of group revenue
Analysts’ consensus price target is 18% below today’s price, and the test comes on October 27
A stock that doubled in a year—and a number you shouldn’t take literally
A year ago, shares of The Cheesecake Factory $CAKE were around $54, and most analysts saw it as a boring mall chain with nowhere left to grow. Today it trades at $112.44, and on October 16 it reached a record $118.46, a gain of 119% in twelve months and a market capitalization of around $5.6 billion.
At first glance, the 13.6% annual revenue growth seems to fit the story. That’s the kind of pace you see at software companies, not restaurants where guests sit in booths next to a clothing store. But you need to know where that figure comes from. It’s a five-year average starting in 2020, when the pandemic knocked the company’s revenue down to $1,983.2 million. Last year, the company brought in $3,751.8 million. From the COVID trough to today, that really does work out to 13.6% a year, but revenue grew just 4.7% year over year in 2025, and this year management is targeting roughly $4 billion, or growth of around 6-7%.
So that headline figure is more a mathematical echo of the pandemic than a description of the present. The real reason the stock has doubled lies elsewhere—and is much more recent.