Jefferies has revised its assessment of Shake Shack (SHAK, Financial), lowering its rating from Hold to Underperform. However, the price target for the company has been raised from $100 to $120. The upgrade in price target reflects acknowledgment of positive developments, yet Jefferies believes that the current share price already factors in the short-term recovery prospects in Shake Shack's same-store sales, which have surged significantly in recent times.
Despite having concrete growth catalysts such as menu innovation, Jefferies points out risks associated with the competitive promotional landscape, elevated expectations from the market, and the current valuation of the stock. These factors contribute to the decision to downgrade the rating. Investors are advised to be cautious as these elements could impact future performance of Shake Shack's stock.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 20 analysts, the average target price for Shake Shack Inc (SHAK, Financial) is $128.15 with a high estimate of $166.00 and a low estimate of $97.00. The average target implies an downside of 6.38% from the current price of $136.88. More detailed estimate data can be found on the Shake Shack Inc (SHAK) Forecast page.
Based on the consensus recommendation from 25 brokerage firms, Shake Shack Inc's (SHAK, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Shake Shack Inc (SHAK, Financial) in one year is $106.00, suggesting a downside of 22.56% from the current price of $136.88. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Shake Shack Inc (SHAK) Summary page.
SHAK Key Business Developments
Release Date: May 01, 2025
- Total Revenue: $320.9 million, a 10.5% increase year over year.
- System-wide Sales: $489.4 million.
- Restaurant-level Profit Margin: 20.7%, a 120 basis point improvement year over year.
- Restaurant Profit: $64.2 million, a 17.3% increase year over year.
- Adjusted EBITDA: $40.7 million, a 13.5% increase year over year.
- Net Income: $4.2 million or $0.10 per diluted share.
- Adjusted Pro Forma Net Income: $6.4 million or $0.14 per fully exchanged and diluted share.
- Cash and Cash Equivalents: $312.9 million at the end of the quarter.
- Same-Shack Sales Growth: 20 basis points.
- Traffic Decline: 4.6% due to weather and macroeconomic pressures.
- Check Growth: 4.8% with approximately 4% in-Shack menu price increase.
- New Shack Openings: 11 system-wide, including 4 company-operated Shacks.
- License Revenue: $11.1 million, an 11.1% increase year over year.
- License Sales: $179.6 million, a 10.4% increase year over year.
- Digital Mix: 38% of sales, up 130 basis points year over year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Shake Shack Inc (SHAK, Financial) achieved a record-high first-quarter total revenue and system-wide sales levels, with total revenue growing by 10.5% year over year.
- The company increased its restaurant-level profit margin by 120 basis points to 20.7%, marking the highest first-quarter margin since 2019.
- Shake Shack Inc (SHAK) plans to open 45 to 50 company-operated Shacks this year, marking the largest class on record, and is on track to reduce build costs by at least 10% in 2025.
- The company is focusing on culinary innovation, introducing new menu items like the Dubai Chocolate Pistachio Shake, which received a phenomenal response.
- Shake Shack Inc (SHAK) is leveraging digital advancements, such as new digital menu boards and guest recognition platforms, to improve operational efficiency and customer engagement.
Negative Points
- Traffic was down 4.6% in the quarter due to unfavorable weather and broader industry pressures, impacting overall sales.
- The company faced significant macroeconomic challenges, including elevated beef costs and wage inflation, which pressured margins.
- Same-Shack sales declined by approximately 1% in April, with continued headwinds from weather and macroeconomic factors.
- Shake Shack Inc (SHAK) experienced outsized pressure in major markets like Los Angeles and New York City due to weather and macroeconomic challenges.
- Despite operational improvements, the company acknowledges a wider range of uncertainty around the macroeconomic backdrop and consumer spending, which could impact future performance.
