After going over the numbers for The Cheesecake Factory’s (CAKE) fourth-quarter earnings report, I decided to recommend sale of the shares. The stock reacted well to the report, despite reporting earnings per share (EPS) $0.05 below expectations, the company continues to struggle with traffic and margins.

In addition, while guidance for 2020 of $2.80 to $2.90 per share in EPS was in line with expectations, it assumes a very low tax rate of 9%, which is not sustainable. Although I applaud the changes management is trying to make, it may be difficult to produce near-term profit improvement. Take the profit we have in the name.