Wunderlich Comments On The Cheesecake Factory Following Q3 Earnings

Following The Cheesecake Factory Incorporated's (NASDAQ: CAKE) third-quarter earnings miss, Wunderlich analyst Robert Derrington issued a note describing his take on the stock.

Derrington began by noting the company posted EPS of $0.48, well below the consensus estimate of $0.57 and the guided range of $0.55-$0.58. According to Derrington, the miss was driven by higher dairy and medical claim costs.

As a result of the the miss, the company's management reduced it fiscal 2014 EPS guidance from $2.19-$2.25 to $2.07-$2.11 and set a fourth quarter EPS range of $0.58-$0.62.

Derrington trimmed his fiscal 2014 EPS estimate from $2.20 to $2.09, and his revenue estimate for the year has gone from $1.975 billion to $1.982 billion on same-store sales growth of 1.7 percent.

Derrington commented, "While Cheesecake Factory continues to generate relatively solid revenue growth, we believe its shares appear fairly valued given its volatile operating trends relative to its valuation."

Derrington reiterated a Hold rating and $46 price target for the stock.