In December 2018, Shake Shack Inc. (NYSE:SHAK) released its earnings update. Generally, the consensus outlook from analysts appear fairly confident, with earnings expected to grow by 41% in the upcoming year compared with the past 5-year average growth rate of 27%. With trailing-twelve-month net income at current levels of US$15m, we should see this rise to US$21m in 2020. Below is a brief commentary around Shake Shack's earnings outlook going forward, which may give you a sense of market sentiment for the company. For those keen to understand more about other aspects of the company, you can research its fundamentals here.
Exciting times ahead?
The 10 analysts covering SHAK view its longer term outlook with a positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. I've plotted out each year's earnings expectations and inserted a line of best fit to calculate an annual growth rate from the slope in order to understand the overall trajectory of SHAK's earnings growth over these next few years.
By 2022, SHAK's earnings should reach US$36m, from current levels of US$15m, resulting in an annual growth rate of 26%. This leads to an EPS of $1.21 in the final year of projections relative to the current EPS of $0.54. Margins are currently sitting at 3.3%, which is expected to expand to 4.3% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Shake Shack, I've compiled three fundamental factors you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Shake Shack worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Shake Shack is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Shake Shack? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.