Shake Shack (NYSE:SHAK) delivers shareholders 5.3% CAGR over 5 years, surging 21% in the last week alone
If you buy and hold a stock for many years, you'd hope to be making a profit. Better yet, you'd like to see the share price move up more than the market average. Unfortunately for shareholders, while the Shake Shack Inc. (NYSE:SHAK) share price is up 30% in the last five years, that's less than the market return. Unfortunately the share price is down 19% in the last year.
Since it's been a strong week for Shake Shack shareholders, let's have a look at trend of the longer term fundamentals.
View our latest analysis for Shake Shack
Shake Shack wasn't profitable in the last twelve months, it is unlikely we'll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. Shareholders of unprofitable companies usually expect strong revenue growth. That's because it's hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.
In the last 5 years Shake Shack saw its revenue grow at 16% per year. That's well above most pre-profit companies. While long-term shareholders have made money, the 5% per year gain over five years fall short of the market return. You could argue the market is still pretty skeptical, given the growing revenues. Arguably this falls in a potential sweet spot - modest share price gains but good top line growth over the long term justifies investigation, in our book.
The graphic below depicts how earnings and revenue have changed over time (unveil the exact values by clicking on the image).
Shake Shack is well known by investors, and plenty of clever analysts have tried to predict the future profit levels. So we recommend checking out this free report showing consensus forecasts
A Different Perspective
We regret to report that Shake Shack shareholders are down 19% for the year. Unfortunately, that's worse than the broader market decline of 15%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 5% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. You could get a better understanding of Shake Shack's growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
We will like Shake Shack better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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