Shake Shack Declines 11% Despite Lower-Than-Expected Q4 Loss

Shares of Shake Shack, Inc. (SHAK) declined 11% in Thursday’s extended trading session despite the company’s lower-than-expected Q4 loss.

The company reported an adjusted loss of $0.11 per share, which compares unfavorably with a loss of $0.03 per share reported in the last year’s quarter. However, the figure was below the analysts’ expectations of a loss of $0.18 per share.

Revenues during the quarter jumped 29% year-over-year to $203.3 million, in line with the consensus estimate. The upside can be attributed to 28.5% and 46.8% growth in shack sales and licensing revenue, respectively.

Shake Shack opened 19 net system-wide shacks in Q4, of which 13 were net domestic company-operated shacks and the remaining were net licensed shacks. As of December 31, 2021, there were 218 company-operated domestic shacks and 151 global licensed shacks, up from 183 and 128, respectively, a year ago.

For full-year 2021, Shake Shack reported revenues of $739.9 million, up 41.5% year-over-year. Also, the adjusted loss of $0.06 per share came much below the loss of $0.56 per share a year ago.

Shake Shack CEO Randy Garutti, said, “We believe that Shake Shack is positioned to manage through ongoing headwinds. With our largest development schedule ever and a healthy balance sheet to support continued investments, we believe we will exit 2022 stronger than where we started and are incredibly excited for this next chapter in the Shake Shack story.”

Outlook

For the first quarter of 2022, Shake Shack expects revenue between $196 million and $201.4 million, below the consensus estimate of $211.5 million. About 97% of revenue is projected to come from shack sales and remaining from licensing.

The company also plans to open 45-50 domestic company-operated shacks in 2022.

Price Target

The stock has a Moderate Buy consensus rating based on 3 Buys and 8 Holds. The average Shake Shack price target of $84 implies 11.7% upside potential from current levels. Shares have tanked 32.7% over the past year.

Negative Sentiment

TipRanks’ Stock Investors tool shows that investors currently have a Very Negative stance on Shake Shack, as 5.9% of investors on TipRanks decreased their exposure to SHAK stock over the past 30 days.

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