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Shake Shack Beats Analysts' Revenue Estimates

Earnings also surpass forecasts

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Alberto Abaterusso
Aug 06, 2019
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Shares of Shake Shack Inc. (

SHAK, Financial) moved 2.2% higher to $74.95 in after-hours trading on Monday after beating second-quarter earnings estimates by 4 cents. The New York-based fast-casual restaurant chain posted a profit of 29 cents per share, which was an 11.5% increase from the prior-year quarter.

Revenue grew 31.3% to $152.71 million, exceeding analysts' expectations by $2.94 million.

Investors were curious to see whether the strong positive momentum reported in first-quarter same-store sales growth was sporadic or an indication of ongoing expansion.

Driven by a jump in guest traffic along with a combination of higher pricing and sales mix, same-store sales grew 3.6% in the second quarter, up 250 basis points year-over-year. Changes to store hours on Easter had a positive effect on comparable sales.

Investors were also closely watching changes in specific metrics, looking for signs that suggest the company can accomplish opening a record 38 to 40 new restaurants in 2019 -- the primary catalyst to the share price.

These changes were 31% growth in Shack sales to $147.9 million and a nearly 43% increase in licensed revenue to $4.8 million. In contrast, the company reported a 340 basis-point decline in operating income margin to 7.8%.

Further, the number of new locations rose to 19, which included six company-operated stores domestically and two stores licensed by Shake Shack.

Looking ahead to full-year 2019, Shake Shack expects revenue of $585 million to $590 million, up from the previous range of $576 million to $582 million but below analysts’ projections of $591.15 million.

Shake Shack closed at $73.34 per share for a market capitalization of $2.72 billion on Monday. Following a 30% increase over the past year through Aug. 5, the stock is now trading above the 200-, 100- and 50-day simple moving average lines. The closing price on Monday was 80.3% above the 52-week low of $40.67 and 4.7% below the 52-week high of $76.81.

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Shake Shack doesn’t pay a dividend.

Sell-side analysts on Wall Street issued a recommendation rating of overweight with an average target price of $68.55 per share.

Disclosure: I have no positions in any securities mentioned.

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