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Shake Shack (SHAK)
NYSE:SHAK
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Shake Shack
(NYSE:SHAK)68Neutral
Positive Factors
Financial Performance
Adjusted EBITDA guidance was raised primarily due to increased confidence in Shake Shack’s new labor model given highly encouraging early results.
Marketing and Advertising
Shake Shack doubled its advertising investment last year, aiming to make the brand more visible.
Negative Factors
Environmental Challenges
The comp headwind associated with the wildfires is expected to linger through the balance of the first quarter.
Shake Shack (SHAK) vs. S&P 500 (SPY)
Market Cap
$4.37B
Dividend YieldN/A
Average Volume (3M)1.47M
Price to Earnings (P/E)426.3
Beta (1Y)0.92
Revenue Growth15.18%
EPS Growth-48.78%
CountryUS
Employees12,196
SectorConsumer Cyclical
Sector Strength53
IndustryRestaurants & Bars
Share Statistics
EPS (TTM)0.23
Shares Outstanding40,082,070
10 Day Avg. Volume2,050,665
30 Day Avg. Volume1,470,606
Financial Highlights & Ratios
PEG Ratio2.31
Price to Book (P/B)N/A
Price to Sales (P/S)3.49
Price to Cash Flow (P/CF)24.20
P/FCF Ratio24.10
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$138.20Price Target Upside39.41% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering17
Shake Shack Business Overview & Revenue Model
Company DescriptionShake Shack, Inc. is a holding company, which engages in operating fast food hamburger restaurants. It offers beef burgers, flat-top dogs, chicken sandwiches, frozen custard and crinkle cut fries and includes all the mobile ordering essentials. The company was founded by Daniel Harris Meyer on September 23, 2014 and is headquartered in New York, NY.
How the Company Makes MoneyShake Shack generates revenue primarily through the operation of company-owned restaurants and, to a lesser extent, through licensed locations across the globe. The majority of Shake Shack's income is derived from the sales of its food and beverages in company-operated stores. In addition, the company earns licensing fees and royalties from licensed Shack locations, which expand its brand presence internationally and in certain domestic markets without the direct capital investment required for company-owned locations. Critical to its revenue model are strategic locations in high-traffic urban areas, innovative menu offerings that attract repeat customers, and a strong brand that leverages social media and word-of-mouth marketing. Partnerships with delivery services also contribute to revenue by allowing Shake Shack to reach a wider audience beyond its physical locations.
Shake Shack Financial Statement Overview
Summary
Shake Shack demonstrates strong growth and operational efficiency, particularly in revenue and cash flow management. While profitability margins are currently tight, the company's financial stability is supported by a balanced approach to leverage and equity. The significant improvement in free cash flow is a positive indicator of future liquidity and investment potential.Income Statement
Shake Shack has shown a strong revenue growth rate of 15.2% from 2023 to 2024, indicating a robust upward trajectory. The gross profit margin remains high at 100%, suggesting efficient cost management. However, the net profit margin is relatively low at 0.8% for 2024, reflecting tight profitability. The EBIT and EBITDA margins are 0.2% and 9.1%, respectively, showing moderate operating efficiency.75
Positive
Balance Sheet
The company's debt-to-equity ratio of 1.70 indicates a moderate level of leverage, which is common in the industry. The return on equity is 2.2%, pointing to modest profitability for shareholders. The equity ratio of 27.7% suggests a reasonable level of financial stability, balancing assets with equity financing.70
Positive
Cash Flow
Shake Shack's free cash flow has improved significantly, with a growth rate of 354% from 2023 to 2024, enhancing liquidity. The operating cash flow to net income ratio is strong at 16.8, showing efficient cash conversion from earnings. The free cash flow to net income ratio stands at 3.5, indicating a healthy cash generation capability.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.25B | 1.09B | 900.49M | 739.89M | 522.87M | Gross Profit |
| 573.92M | 398.39M | 381.54M | 306.52M | 212.72M | EBIT |
| 3.04M | 5.92M | -20.34M | -14.13M | -34.51M | EBITDA |
| 120.89M | 111.74M | 51.53M | 44.48M | 5.58M | Net Income Common Stockholders |
| 10.21M | 20.26M | -25.97M | -10.11M | -45.53M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 320.71M | 293.21M | 311.23M | 302.41M | 183.76M | Total Assets |
| 1.70B | 1.61B | 1.49B | 1.46B | 1.15B | Total Debt |
| 796.92M | 771.33M | 714.05M | 686.19M | 384.98M | Net Debt |
| 476.21M | 546.68M | 483.53M | 383.78M | 238.10M | Total Liabilities |
| 1.20B | 1.14B | 1.08B | 1.02B | 710.86M | Stockholders Equity |
| 470.02M | 443.42M | 395.12M | 435.60M | 407.32M |
| Cash Flow | Free Cash Flow | |||
| 35.66M | -14.03M | -65.82M | -43.09M | -31.69M | Operating Cash Flow |
| 171.16M | 132.14M | 76.74M | 58.40M | 37.35M | Investing Cash Flow |
| -66.08M | -132.32M | -143.42M | -144.89M | -69.40M | Financing Cash Flow |
| -9.02M | -5.68M | -5.20M | 242.02M | 141.82M |
Shake Shack Technical Analysis
Negative
99.13
Price Trends
118.75
Negative
120.96
Negative
108.50
Negative
Market Momentum
-4.34
Positive
36.98
Neutral
5.87
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SHAK, the sentiment is Negative. The current price of 99.13 is below the 20-day moving average (MA) of 109.92, below the 50-day MA of 118.75, and below the 200-day MA of 108.50, indicating a bearish trend. The MACD of -4.34 indicates Positive momentum. The RSI at 36.98 is Neutral, neither overbought nor oversold. The STOCH value of 5.87 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SHAK.
Shake Shack Risk Analysis
Shake Shack disclosed 53 risk factors in its most recent earnings report. Shake Shack reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Shake Shack Peers Comparison
Overall Rating
UnderperformOutperform
Sector (60)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $72.06B | 48.11 | 45.67% | ― | 14.61% | 25.68% | |
76 Outperform | $218.46B | 26.84 | -216.57% | 2.22% | 1.67% | -1.61% | |
75 Outperform | $44.21B | 30.38 | -19.43% | 1.72% | 6.68% | -7.09% | |
68 Neutral | $4.37B | 426.31 | 2.17% | ― | 15.18% | -48.78% | |
66 Neutral | $2.99B | 15.79 | 74.94% | 6.70% | 2.98% | -2.58% | |
60 Neutral | $13.01B | 10.45 | 0.79% | 3.53% | 1.60% | -22.47% |
* Consumer Cyclical Sector Average
Performance Comparison
SHAK
Shake Shack
99.13
-1.83
-1.81%
CMG
Chipotle
53.60
-0.20
-0.37%
MCD
McDonald's
307.45
21.47
7.51%
WEN
Wendy's
14.95
-2.62
-14.91%
YUM
Yum! Brands
159.37
22.51
16.45%
QSR
Restaurant Brands International
66.64
-11.98
-15.24%
Shake Shack Earnings Call Summary
Earnings Call Date: Feb 20, 2025 | % Change Since: -10.88% | Next Earnings Date: May 1, 2025
Earnings Call Sentiment Positive
Shake Shack presented a strong performance in 2024 with significant revenue growth, margin expansion, and strategic initiatives for future expansion. However, challenges such as weather impacts, commodity pressures, and a high investment phase in 2025 present potential obstacles. Despite these challenges, the company's strategic priorities and operational improvements reflect confidence in its growth trajectory.Highlights
Strong Revenue Growth
Fourth quarter revenue increased by 14.8%, driven by 4.3% same Shack sales growth.
Record Restaurant-Level Margins
Restaurant-level margins expanded nearly 300 basis points to 22.7%, and adjusted EBITDA grew almost 50%.
Expansion and Strategic Growth
Shake Shack aims to expand to at least 1,500 company-operated Shacks, more than four times its current size of 329.
Operational Improvements
Introduced a new labor model and efficiency measures, resulting in an 80 basis point labor cost improvement in Q4.
Successful Marketing and Innovation
Increased brand awareness with campaigns like 'Worth It' and culinary innovations like the Black Truffle menu.
Lowlights
Weather and Natural Disasters Impact
Same-Shack sales in January were negatively impacted by 150 to 200 basis points due to significant weather pressures and the Los Angeles wildfires.
Choppy Start to Q1 2025
Q1 2025 started with choppy trends due to weather, wildfires, and lapping of strong prior-year LTOs, impacting same-Shack sales.
Commodity and Inflation Pressures
Concerns about volatile commodity prices, particularly beef, and potential tariff impacts could pressure margins.
High Investment Year
2025 is a high investment year, focusing on tech, operations, and development, which may constrain margin expansion.
Company Guidance
During Shake Shack's Fourth Quarter 2024 Earnings Call, the company outlined several key performance metrics and strategic goals. Fourth quarter revenue increased by 14.8%, driven by a 4.3% rise in same Shack sales, with restaurant-level margins expanding nearly 300 basis points to 22.7% and adjusted EBITDA growing by almost 50%. For the fiscal year 2025, Shake Shack aims for low teens total revenue growth, low teens unit growth, at least approximately 22% restaurant-level margins, and EBITDA growth in the low to mid-teens, outpacing top-line growth. The company has set a target of reaching 1,500 company-operated Shacks across the U.S. and aims to increase internal promotions by 10% in 2025. Additional strategic priorities include optimizing restaurant operations with a new scorecard system that focuses on improving key performance indicators like staffing, retention, speed of service, and profit. The company plans to leverage its supply chain to offset inflationary pressures and to drive comp sales by increasing guest frequency through marketing and culinary innovation. Shake Shack also plans to continue expanding its licensed business, with a goal of opening 35 to 40 new licensed Shacks in 2025. The company ended 2024 with $320.7 million in cash and generated a record $36 million in free cash flow.Shake Shack Corporate Events
Business Operations and StrategyFinancial Disclosures
Shake Shack Reports Strong Fiscal Year 2024 Results
Positive
Feb 20, 2025
On February 20, 2025, Shake Shack announced its financial results for the fourth quarter and fiscal year ending December 25, 2024. The company reported a 15.2% increase in total revenue for the fiscal year 2024, reaching $1,252.6 million, with significant growth in Shack sales and licensing revenue. The results highlight Shake Shack’s continued expansion, with 43 new company-operated locations and 33 new licensed locations opened in 2024, reflecting its strategic growth and strong market demand.
Business Operations and StrategyFinancial Disclosures
Shake Shack Reports Strong Growth and Profitability
Positive
Jan 13, 2025
Shake Shack announced its preliminary unaudited financial results for the fourth quarter and fiscal year 2024, highlighting a significant improvement in profitability and a 48% year-over-year growth in Adjusted EBITDA. The company has set ambitious long-term targets, including expanding its Company-operated footprint to at least 1,500 Shacks, reflecting a robust growth strategy and a positive outlook for future financial performance. These developments are poised to strengthen Shake Shack’s position in the restaurant industry and provide substantial benefits to its team members and shareholders.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.