SHAK - Shake Shack Inc.

NYSE - NYSE Delayed Price. Currency in USD
68.45
-2.42 (-3.41%)
At close: 4:02PM EST
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Previous Close70.87
Open71.19
Bid68.25 x 1800
Ask68.31 x 800
Day's Range67.64 - 71.40
52 Week Range47.29 - 105.84
Volume2,396,443
Avg. Volume1,914,014
Market Cap2.568B
Beta (5Y Monthly)N/A
PE Ratio (TTM)101.26
EPS (TTM)N/A
Earnings DateFeb 23, 2020 - Feb 27, 2020
Forward Dividend & YieldN/A (N/A)
Ex-Dividend DateN/A
1y Target Est74.79
  • Will Shake Shack Stock Really Roar Back Above $100?
    InvestorPlace

    Will Shake Shack Stock Really Roar Back Above $100?

    In late 2019, shares of premium fast casual restaurant chain Shake Shack (NYSE:SHAK) plummeted on the heels of a disappointing third-quarter earnings report that included the company's slowest comparable sales growth rate in a year, significant margin compression and a reduced full-year comparable sales and margin guide. SHAK stock, which was flying high around $105 just a few weeks earlier, crashed to $55 a few weeks after the print.Source: JHENG YAO / Shutterstock.com Then, this year, Goldman Sachs turned bullish.Following an investor presentation from management, the analyst team at Goldman Sachs recently released a hugely bullish report on Shake Shack with a simple yet compelling thesis that went something like this:InvestorPlace - Stock Market News, Stock Advice & Trading TipsShake Shack reported bad third-quarter numbers because of delivery headwinds related to the company moving from multiple delivery platforms to just one -- GrubHub (NYSE:GRUB). Over the next quarter and into next year, those delivery headwinds will turn into tailwinds driven by marketing synergies with GrubHub, while menu innovation and international expansion tailwinds kick in. As that happens, the numbers will improve and Shake Shack's stock will bounce back. * The 10 Best Value Stocks to Own in 2020 The market liked the sound of that. In response to the GS report, SHAK stock popped more than 10%. But I'm wary of this rebound.For one, there are bigger headwinds here than the delivery platform transition alone. I don't see those headwinds going away any time soon. And SHAK stock is still very richly valued. Ultimately, this combination of persistent headwinds and a full valuation could limit further upside in shares. Shake Shack Has Some ProblemsBulls want to blame Shake Shack's bad third-quarter performance -- 2% comparable sales growth (the worst in a year), 1.3% two-year-stack comparable sales growth (also the worst in a year), a nearly 300 basis point drop in restaurant-level operating margins (continuing a multi-quarter trend of huge margin compression), and a reduced full-year comps and margin guide -- on the fact that Shake Shack went from multiple delivery platforms to one delivery platform in the quarter.But does one small change really impact all of those financials that much?No. There are some much larger and longer-running headwinds at play here.First, new Shake Shack stores aren't performing up to par. Average weekly sales and average unit volumes have been in decline since 2015, and that decline isn't moderating. It's getting worse, because the more Shake Shack grows outside of its core high-income, urban-centric markets, the less well their stores perform on average. No matter how many new chicken options the company adds to the menu, this dynamic won't change, because it's built into Shake Shack's business model of high prices and small portions.Second, persistent cost pressures -- including rising wages, higher delivery packaging costs and food inflation -- are weighing on margins. These pressures aren't going anywhere. The labor market is full, so wages will keep rising. Delivery is the future of fast-food distribution, so those costs are sticking around. Food inflation will keep running higher as demand grows with strong economic activity.Third, the company is sticking to a cadence of roughly 40 new company-owned stores per year. That's a problem, because the store base is growing, but the number of new stores being added is not. So the unit growth rate is slowing, which is creating a natural drag on revenue growth rates. Shake Shack Stock Is Priced Too RichlyAll things considered, Shake Shack's numbers likely won't bounce back in 2020. If they don't, SHAK stock won't bounce back, either, because even after the selloff, shares remain very richly valued.The average restaurant stock trades around 26-times forward earnings. Shake Shack stock trades at 115-times forward earnings. Bulls will argue that Shake Shack only has 151 locations in America, versus 14,000 for McDonald's (NYSE:MCD), so SHAK stock deserves its premium valuation because of its huge long-term growth potential.Fair enough on the face of it. But let's play that scenario out.Shake Shack will never be as big as McDonald's. McDonald's caters to the entire income spectrum; Shake Shack's customers are in the $100,000 and up income bracket. Only 30% of American households belong in that bracket, and far less at a global level. But to be aggressive, let's assume that in a best-case scenario, Shake Shack can one day be 30% the size of McDonald's.McDonald's is a $160 billion company. The 100th McDonald's store opened in 1959, so to go from 100 stores to where they are today, it took McDonald's 61 years. Again being aggressive, let's say Shake Shack can go from its 100th company-owned store (opened in 2Q18) to 30% of McDonald's size in about 30 to 35 years, implying a roughly $50 billion market cap for Shake Shack by around 2051.Now let's discount that market cap target back by 10% per year. That equates to a $2.6 billion market cap today.Shake Shack's market cap as of this writing is over $2.6 billion. Even if you assume that Shake Shacks gets to 30% the size of McDonald's globally within 30 to 35 years (which, to my mind, is a best-case scenario), then SHAK stock today still isn't undervalued. Bottom Line on SHAK StockBulls would have you believe that Shake Shack's bad third-quarter numbers were the result of near-term delivery headwinds that won't persist for much longer. I don't buy that. There are much larger- and longer-running headwinds at play that will continue to adversely impact Shake Shack's growth trajectory for the foreseeable future.SHAK stock, at a triple-digit forward earnings multiple, isn't priced for this. As such, I'd be wary of buying into a SHAK stock bounce.As of this writing, Luke Lango did not own a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Monthly Dividend Stocks to Buy to Pay the Bills * 7 Earnings Reports to Watch Next Week * 7 5G Stocks to Connect Your Portfolio To The post Will Shake Shack Stock Really Roar Back Above $100? appeared first on InvestorPlace.

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  • Shake Shack (SHAK) Catches Eye: Stock Jumps 6.8%
    Zacks

    Shake Shack (SHAK) Catches Eye: Stock Jumps 6.8%

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  • Shake Shack's Same-Store Sales to Gain on Menu Innovation
    Zacks

    Shake Shack's Same-Store Sales to Gain on Menu Innovation

    Shake Shack (SHAK) menu innovation, partnership with Grubhub and unit expansion efforts bode well.

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  • Tesla, Apple, and Shake Shack get another boost from bulls
    Yahoo Finance

    Tesla, Apple, and Shake Shack get another boost from bulls

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  • MarketWatch

    Shake Shack shares pop as Goldman Sachs sees menu innovation driving same-store sales

    Shake Shack Inc. shares jumped 8% in Wednesday trading after a bullish note from Goldman Sachs forecasts a menu-driven same-store sales rise. Goldman analysts say softness in the burger chain's third-quarter results was due to a weak menu. Same-store sales rose 2% in the third-quarter, falling short of the 2.5% growth FactSet forecast. During the fourth quarter, Shake Shack added a group of holiday-themed milkshakes that customers responded well to, analysts said. Recently, Shake Shack brought back the popular Shackmeister item to U.S. menus, and Hot Chick'n will be coming later in the year along with the introduction of Hot Chick'n Bites, a spicy version of the Chick'n Bites item. "We note a key investor concern has been that Shake Shack would take these items off the menu all together due to operational complexity and costs," Goldman wrote, with reference to the chicken offerings. Speaking at the ICR Conference, Shake Shack Chief Executive Randall Garutti also said the company is working on a new version of the veggie burger. Moreover, the disruption that had been anticipated from the Grubhub Inc. integration seem to be "manageable." About 40% of Shake Shacks are now exclusively on Grubhub. "Estimates are already factoring in a high level of disruption as they migrate to Grubhub," Goldman wrote. Goldman Sachs rates Shake Shack shares buy with a 12-month target of $115. Analysts see an 80% upside to that price target. Shake Shack stock has rallied 43% over the past year while the S&P 500 index has gained 26.1% for the period.

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  • Benzinga

    Shake Shack Stock Heats Up Following ICR Presentation, Bullish Goldman Comments

    Shake Shack kicked off a delivery partnership with GrubHub Inc (NYSE: GRUB) in mid-November before switching to an exclusive partnership, Fogertey said in a Tuesday note. During Shake Shack's presentation at the conference, execs said the company recently completed the point-of-sale integration of GrubHub, but so far only 40% of Shake Shack locations have migrated to GrubHub as their sole delivery provider, the analyst said.

  • Shake Shack Calls Hot as Stock Breaks Out
    Schaeffer's Investment Research

    Shake Shack Calls Hot as Stock Breaks Out

    A short squeeze could keep the upside going

  • TheStreet.com

    Shake Shack Surges as Goldman Sachs Reiterates Buy Rating

    Shake Shack is higher after a Goldman Sachs analyst reiterates her buy rating of the restaurant chain and her $115 price target.

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  • American City Business Journals

    Shake Shack is coming to Midtown Tampa

    The iconic New York burger joint is finally bringing Shack Stacks and custard concretes to Tampa Bay.

  • Here's What We Think About Shake Shack Inc.'s (NYSE:SHAK) CEO Pay
    Simply Wall St.

    Here's What We Think About Shake Shack Inc.'s (NYSE:SHAK) CEO Pay

    Randy Garutti became the CEO of Shake Shack Inc. (NYSE:SHAK) in 2012. This report will, first, examine the CEO...

  • How Did Shake Shack Inc (SHAK) Compare Against Top Hedge Fund Stocks in 2019?
    Insider Monkey

    How Did Shake Shack Inc (SHAK) Compare Against Top Hedge Fund Stocks in 2019?

    It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth […]

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  • Business Wire

    Shake Shack to Present at the 22nd Annual ICR Conference

    Shake Shack Inc. ("Shake Shack" or the "Company") (NYSE:SHAK), today announced that the Company will be presenting at the 22nd Annual ICR Conference at the JW Marriott Orlando Grande Lakes in Orlando, Florida on Tuesday, January 14, 2019. Presenting from the Company will be Randy Garutti, Chief Executive Officer and Tara Comonte, President & Chief Financial Officer. The presentation will begin at 8:30 a.m. Eastern Time.

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  • Goldman Sachs predicts Shake Shack to rally 80% on Grubhub deal
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    Goldman Sachs predicts Shake Shack to rally 80% on Grubhub deal

    Goldman Sachs is predicting that Shake Shack will rally 80% due to its new, exclusive deal with Grubhub. Yahoo Finance’s Seana Smith and Heidi Chung discuss on The Ticker.

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