CHEESECAKE FACTORY STOCK TAKES TUMBLE.

Byline: Dave McNary Daily News Staff Writer

Shares of The Cheesecake Factory lost 11 percent of their value Tuesday to hit their lowest point in nearly a year amid a massive Wall Street sell-off that punished many issues.

Cheesecake Factory fell $2.0625 to $16.9375 a share for its worst close since Aug. 13, 1997. The stock has dropped 36 percent since hitting an all-time high of $26.50 on April 13.

Tuesday's decline came as the the Dow Jones industrial average plunged nearly 300 points in its third-biggest point drop due to signs of a weakening economy and doubts about the outlook for corporate profits.

Jane Vallaire, a spokeswoman for the Calabasas-based casual-dining specialist, said Cheesecake Factory's decline stemmed solely from market conditions. Analysts Michael Mueller of NationsBanc Montgomery Securities and Michael Smith of Fahnestock & Co. agreed but added that bearish investor sentiment toward smaller companies in the restaurant sector also probably pulled down the shares.

``It's a very difficult market for small-cap companies,'' said Mueller, who believes the stock should be trading as high as $30. ``Fundamentally, The Cheesecake Factory is doing great.''

Smith noted that restaurant stocks tend to be volatile and are out of favor on Wall Street at the moment.

``Cheesecake Factory has not made a mistake in the important part of its business,'' he said.

The company, which split its stock 3-for-2 earlier this year, recently reported a 62.5 percent gain in second-quarter profits to $3.9 million, or 19 cents a share, on a 26 percent rise in revenues to $64.3 million. It operates 24 restaurants, including outlets in Calabasas, Pasadena and Woodland Hills, and plans to open five more this year, including one in Thousand Oaks.