Yahoo Finance CAKE vs. SHAK: Which Stock Is the Better Value Option?
Investors interested in stocks from the Retail - Restaurants sector have probably already heard of Cheesecake Factory (CAKE) and Shake Shack (SHAK). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, both Cheesecake Factory and Shake Shack are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
CAKE currently has a forward P/E ratio of 11.86, while SHAK has a forward P/E of 114.07. We also note that CAKE has a PEG ratio of 1.09. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. SHAK currently has a PEG ratio of 3.35.
Another notable valuation metric for CAKE is its P/B ratio of 5.76. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, SHAK has a P/B of 7.59.
Based on these metrics and many more, CAKE holds a Value grade of A, while SHAK has a Value grade of D.
Both CAKE and SHAK are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CAKE is the superior value option right now.
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The Cheesecake Factory Incorporated (CAKE) : Free Stock Analysis Report
Shake Shack, Inc. (SHAK) : Free Stock Analysis Report
