Financial Comparison: Chuy’s (NASDAQ:CHUY) & Cheesecake Factory (NASDAQ:CAKE)

Chuy’s (NASDAQ:CHUY) and Cheesecake Factory (NASDAQ:CAKE) are both small-cap retail/wholesale companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, earnings, profitability, institutional ownership, valuation and risk.

Risk & Volatility

Chuy’s has a beta of 1.71, meaning that its stock price is 71% more volatile than the S&P 500. Comparatively, Cheesecake Factory has a beta of 1.39, meaning that its stock price is 39% more volatile than the S&P 500.

Earnings and Valuation

This table compares Chuy’s and Cheesecake Factory’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Chuy’s $426.36 million 0.52 $6.22 million $1.04 12.73
Cheesecake Factory $2.48 billion 0.40 $127.29 million $2.61 8.31

Cheesecake Factory has higher revenue and earnings than Chuy’s. Cheesecake Factory is trading at a lower price-to-earnings ratio than Chuy’s, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Chuy’s and Cheesecake Factory, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Chuy’s 0 6 3 0 2.33
Cheesecake Factory 4 13 4 0 2.00

Chuy’s presently has a consensus target price of $18.63, suggesting a potential upside of 40.67%. Cheesecake Factory has a consensus target price of $29.43, suggesting a potential upside of 35.68%. Given Chuy’s’ stronger consensus rating and higher probable upside, equities analysts clearly believe Chuy’s is more favorable than Cheesecake Factory.

Profitability

This table compares Chuy’s and Cheesecake Factory’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Chuy’s -2.25% 7.41% 3.17%
Cheesecake Factory 3.86% 17.43% 3.61%

Insider & Institutional Ownership

91.2% of Cheesecake Factory shares are held by institutional investors. 2.1% of Chuy’s shares are held by insiders. Comparatively, 8.5% of Cheesecake Factory shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Cheesecake Factory beats Chuy’s on 10 of the 14 factors compared between the two stocks.

About Chuy’s

Chuy's Holdings, Inc., through its subsidiaries, owns and operates full-service restaurants under the Chuy's name in Texas and 19 states in the Southeastern and Midwestern United States. As of December 30, 2018, it operated 100 restaurants. The company was founded in 1982 and is headquartered in Austin, Texas.

About Cheesecake Factory

The Cheesecake Factory Incorporated engages in the operation of restaurants. The company produces cheesecakes and other baked products for own restaurants and international licensees, as well as external foodservice operators, retailers, and distributors. As of April 16, 2019, it owned and operated 219 full-service casual-dining restaurants in the United States, including Puerto Rico and Canada comprising 202 restaurants under The Cheesecake Factory name; 14 restaurants under the Grand Lux Café name; and 2 restaurants under the RockSugar Southeast Asian Kitchen name, as well as 22 The Cheesecake Factory restaurants under licensing agreements internationally. The company was founded in 1972 and is headquartered in Calabasas, California.

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