Will Shake Shack’s 4Q16 Earnings Boost Its Stock Price?



Stock performance

Shake Shack (SHAK), a New York–based fine casual restaurant chain, is expected to post its 4Q16 earnings after the market closes on March 1, 2017.

In 3Q16, SHAK outperformed analysts’ estimates and posted EPS (earnings per share) of $0.15 on revenues of $74.6 million. Analysts were expecting the company to post EPS of $0.14 and revenue of $69.3 million.

After releasing better-than-expected 3Q16 results, SHAK management raised its revenue guidance for 2016 to $264.0 million–$265.0 million compared to the previous guidance of $253.0 million–$256.0 million. That increased investor confidence, leading to a rise in SHAK stock.

As of February 21, 2017, SHAK stock was trading at $37.48, which is a rise of 12.7% from its 3Q16 earnings released on November 9, 2016. SHAK stock also got a boost from being added to the S&P SmallCap 600 Index. When a company is added to a major stock index, its stock price typically rises.

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Year-to-date performance

It was a rough year for SHAK in 2016, with its stock falling 7.2%. But 2017 started out better. The stock has risen 4.7% since the beginning of the year. During the same period, peers Chipotle Mexican Grill (CMG) and Panera Bread (PNRA) have risen 14.6% and 13.2%, respectively.

The SPDR S&P 500 ETF (SPY) (SPX) has risen 5.8% year-to-date. SPY has invested in restaurant companies such as McDonald’s (MCD) and Starbucks (SBUX).

Series overview

In this pre-earnings series, we’ll see what we can expect from SHAK’s upcoming 4Q16 earnings release. We’ll look at analysts’ estimates for revenue, EBIT (earnings before interest and tax) margins, and EPS. Finally, we’ll look at the company’s valuation multiple and its expected stock price over the next 12 months.

Let’s start by seeing what analysts are expecting for SHAK’s revenue in 4Q16.


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