Shake Shack stock soars on Q4 earnings beat
Burger chains Shake Shack (SHAK) and Wendy's (WEN) reported divergent fourth quarter results.
Shake Shack shares are rising after beating earnings estimates, with revenue of $286.2 million and adjusted earnings per share of $0.02 both surpassing forecasts. However, Wendy's stock is under pressure after missing fourth-quarter expectations and providing a weak 2024 outlook.
Yahoo Finance's Brooke DiPalma breaks down the details.
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Editor's note: This article was written by Angel Smith
Video Transcript
BRAD SMITH: We're also tracking fast food, if you're hungry out there. Fast food in focus after earnings reports from burger chains, like Shake Shack and Wendy's. Shares of Shake Shack skyrocketing on its Q4 report, seeing a beat on both the top and bottom line. Comparable sales also surpassing the Street's estimates.
Shares of Wendy's, on the other hand, falling, as Alicia Keys would say, after a sales miss and a weak outlook for the full year. Here with some takeaways, we've got Yahoo Finance's Brooke DiPalma. Hey, Brooke.
BROOKE DIPALMA: Good morning to you both. Certainly, this is the tale of two burger chains, one going really well. And the other one not going as well. And Shake Shack-- let's kick things off there. Analysts expecting to really applaud this. The Street really already very well pleased with these quarterly results.
The company was more profitable in Q4, despite inflationary headwinds that we've seen in food and packaging costs. In addition to that, the CEO lending that profitability due to strategic marketing initiatives like their partnership with trolls as well as a fun promotion with the chicken dance that they did with the NFL, where they gave out free chicken jacks.
They also implemented kiosks at all their domestic company operated stores. And those continue to bode well for the company. Like we're seeing with many other fast food and fast casual chains, people tend to spend more on these digital kiosks. Now, the company does expect total revenue for 2024 to come in between $1.21 billion to $1.25 billion. That's growing around 11% to 15% year-over-year.
But menu prices will return to a more pre-COVID normalized level of roughly 2.5%. So that's good news, although, higher, good news. But watch out, because in California with that FAST Act coming to play in April, they do expect to raise prices even higher there to offset that labor inflation.
But Randy Garutti is coming out of the CEO role. They did say on the call that we can expect a transition of leadership in the coming months. But like I said, Wall Street really applauding this. William Blair analyst saying longer term, we continue to view Shake Shack's growth runway as one of the strongest and proven among emerging restaurant brands.
They did nearly double their footprint since 2019. But largely, we'll wait and see how this all goes, as there's so much going on globally in terms of conflicts.
Wendy's, on the other hand, not so good.
