Shake Shack (SHAK) Q3 Earnings Match Estimates, Revenues Top
Shake Shack Inc. SHAK reported third-quarter 2022 results, with earnings meeting the Zacks Consensus Estimate and revenues surpassing the same. The top line rose year over year, while the bottom line declined from the prior-year quarter's figure.
Following the results, the company’s shares declined 8.2% during trading hours on Nov 3. Negative investor sentiments were witnessed as the management cited concerns about an uncertain operating environment because of inflationary pressures, uneven consumer mobility, supply chain-related disruptions and continued development delays.
Earnings & Revenues Details
During the quarter, the company reported an adjusted loss per share of 6 cents in line with the Zacks Consensus Estimate. In the prior-year quarter, the company reported an adjusted loss per share of 5 cents.
Shake Shack, Inc. Price, Consensus and EPS Surprise
Shake Shack, Inc. price-consensus-eps-surprise-chart | Shake Shack, Inc. Quote
Quarterly revenues of $227.8 million beat the consensus mark of $227 million. The top line increased 17.5% on a year-over-year basis.
Shack sales during the quarter rose 17.4%year over year to $219.5 million, whereas licensing revenues increased 20.1% to $8.3 million year over year. Shack system-wide sales in third-quarter fiscal 2022 soared 18.3% year over year to $353.2 million.
Comps Discussion
Same-Shack sales rose 6.3% in third-quarter fiscal 2022, primarily driven by traffic growth (of 2.9%) and price mix. Urban same-shack sales rose 11% on a year-over-year basis.
During the third quarter of fiscal 2022, its average weekly sales came in at $73,000, compared with $76,000 reported in the previous quarter.
Operating Highlights
During the reported quarter, the company’s operating loss totaled $4.8 million. Shack-level operating profit margin came in at 16.3% compared with 15.8% reported in the prior-year quarter.
Total expenses (as a percentage of company revenues) increased 70 basis points (bps) year over year. Food and paper costs (as a percentage of company revenues) declined 10 basis points (bps) year over year. Labor and related expenses declined 170 bps year over year to 29.4%.
Adjusted EBITDA in the reported quarter amounted to $19.5 million compared with $15.8 million in the year-ago quarter. Adjusted EBITDA margin expanded 40 bps year over year to 8.6%.
Balance Sheet
As of Sep 28, 2022, cash and cash equivalent totaled $257 million compared with $278.3 million as of Jun 29, 2022. Total long-term debt at the end of the quarter increased to $244.3 million compared with $244.1 million as of Jun 29, 2022.
Q4 & 2022 Outlook
For fourth-quarter fiscal 2022, the company expects total revenues between $233.2 million and $238.7 million. The Zacks Consensus Estimate for revenues is pegged at $238 million. Shack sales are anticipated to be $225-$230 million. The company’s licensing revenue expectation is between $8.2 million and $8.7 million for fourth-quarter fiscal 2022.
For fourth-quarter fiscal 2022, Shack-Level operating profit is projected in the range of 16-18%. Depreciation expense for 2022 is expected in the range of $70-$75 million.
Zacks Rank & Key Picks
Shake Shack currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Some better-ranked stocks in the Zacks Retail – Restaurants industry are Wingstop Inc. WING, Potbelly Corporation PBPB and Chipotle Mexican Grill, Inc. CMG.
Wingstop sports a Zacks Rank #1. WING has a long-term earnings growth rate of 11%. Shares of WING have declined 8.6% in the past year.
The Zacks Consensus Estimate for Wingstop’s 2023 sales and EPS suggests growth of 18.1% and 16.4%, respectively, from the comparable year-ago period’s levels.
Potbelly currently carries a Zacks Rank #2 (Buy). PBPB has a trailing four-quarter earnings surprise of 0.8%, on average. Shares of PBPB have declined 15.9% in the past year.
The Zacks Consensus Estimate for Potbelly’s 2022 sales and EPS suggests growth of 17.9% and 101.9%, respectively, from the corresponding year-ago period’s levels.
Chipotle currently carries a Zacks Rank #2. CMG has a trailing four-quarter earnings surprise of 4.1%, on average. The stock has declined 22.4% in the past year.
The Zacks Consensus Estimate for Chipotle’s 2022 sales and EPS suggests growth of 15.2% and 30.8%, respectively, from the corresponding year-ago period’s levels.
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