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Wall Street Relatively Stable Tuesday

Shake Shack sinks 19% after reporting 3rd-quarter results

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Omar Venerio
Nov 05, 2019
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Stocks were in the green on Tuesday after the Dow Jones hit a record high yesterday. The Dow Jones Industrial Average gained 0.19% to 27,513, the S&P 500 index remained flat at 3,078 and the Nasdaq Composite Index rose 0.14% to 8,444.

Non-index stocks have also posted gains and losses recently. Shares of Shake Shack Inc. (

SHAK, Financial) fell more than 19% on Tuesday after the company announced third-quarter results. The company posted earnings of 26 cents per share, beating estimates by 5 cents. Revenue of $157.76 million beat expectations by $0.31 million.

“We're pleased to report total revenue grew nearly 32% and the team delivered another quarter of positive Same-Shack sales of 2%, continuing to drive positive traffic of 1.2%. Based on our results to date, we are raising our 2019 revenue guidance, including our licensing revenue guidance," CEO Randy Garutti said.

Despite the beat, the stock tanked after announcing it will be temporarily shutting some of its locations in order to upgrade them. 

For the quarter, operating income was $8.2 million, or 5.2% of total revenue, down 260 basis points. The decrease included a number of one-time charges and costs related to Project Concrete.

Adjusted earnings before interest, taxes, depreciation and amortization rose 9.1% to $23.3 million. As a percentage of total revenue, adjusted Ebitda margins declined 300 basis points to 14.8%.

Looking ahead, the company expects total revenue between $592 million to $597 million. It also projects licensing revenue in the range of $18 million to $18.5 million.

During the quarter ended June 30,

Jim Simons (Trades, Portfolio) reduced his stake by 11% to 1,354,100 shares and Jeremy Grantham (Trades, Portfolio) curbed his position by 10% to 278,000 shares. Louis Moore Bacon (Trades, Portfolio) established a new holding, buying 25,000 shares.



Global markets

The main European stock markets traded mostly higher.The U.K.'s FTSE 100 rose 0.25%, France's CAC 40 swelled 0.39%, Germany's Dax gained 0.09% and Spain's IBEX 35 dipped 0.09%.

In Asia, Japan's Nikkei 225 gained 1.76%, India’s BSE Sensex slid 0.13%, Hong Kong's Hang Seng advanced 0.49% and China's Shanghai Composite rose 0.54%.

Disclosure: The author holds no positions in any stocks mentioned.

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