Are Cheesecake Factory Inc (CAKE) shares trading below fair value?
Cheesecake Factory Inc (CAKE) receives a strong rating of 67 from InvestorsObserver To analyse. Our proprietary rating system takes into account the overall health of the company by looking at stock price, earnings and growth rate to determine if it represents good value. CAKE holds a better value than 67% of the stock at its current price. Investors who focus on long-term growth through long-term investments will find the valuation ranking particularly relevant when allocating their assets.
CAKE has a year-over-year price-to-earnings (PE) ratio of 314.4. The historical average of around 15 indicates low value for CAKE’s stock as investors pay higher stock prices relative to the company’s earnings. CAKE’s high PE ratio shows that the company has recently traded above its fair market value. Its earnings per share (EPS) over the last 12 months of 0.13 does not justify the current share price. However, rolling PE ratios do not take into account the company’s projected growth rate, resulting in many new companies having high PE ratios due to high growth potential that attracts investors despite insufficient earnings. . CAKE has a 12-month PE-to-Growth (PEG) ratio of 1.59. Markets are overvaluing CAKE relative to its projected growth, as its PEG ratio is currently above the fair market value of 1. The PEG of 0.129999995 comes from its forward price-to-earnings ratio divided by its growth rate. PEG ratios are one of the most widely used valuation metrics due to the incorporation of more fundamental business metrics and the focus on the future of the business rather than about his past.
Overall, these valuation metrics paint a pretty poor picture for CAKE at its current price due to an overvalued PEG ratio despite strong growth. The PE and PEG for CAKE are worse than the market average, resulting in a review score of 67. Click here for the full Cheesecake Factory Inc (CAKE) stock report.
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