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Why Shake Shack’s Analysts Expect Its Earnings to Rise

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Aug. 18 2020, Updated 6:15 a.m. ET

SHAK’s earnings per share

Now that we’ve seen the analysts’ estimates for Shake Shack’s (SHAK) revenue and EBIT (earnings before interest and tax) margin for 2Q17, let’s explore the company’s 2Q17 EPS (earnings per share).

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2Q17 estimates

For 2Q17, analysts are expecting Shake Shack (SHAK) to post EPS (earnings per share) of $0.16, which would be a growth of 14.3% over its EPS of $0.14 in 2Q16. Analysts are expecting this revenue growth and SHAK’s new accounting standard to drive the EPS in 2Q17. However, some of this growth is expected to be offset by a decline in the EBIT margin and a rise in interest expenses.

Notably, Shake Shack has outperformed the analysts’ estimates four times in the past five quarters. When this happens, a stock price tends to rise.

Peer comparisons and outlook

For 2Q17, Chipotle Mexican Grill (CMG) posted EPS growth of 166.7%. Jack in the Box’s (JACK) EPS is expected to fall 0.2%.

For the next four quarters, analysts expect Shake Shack to post EPS of $0.51, which would be a 6.3% rise over its EPS of $0.48 in the corresponding quarters of the previous year. This EPS growth is expected to be driven by revenue growth.

In the next part, we’ll examine Shake Shack’s valuation multiple.

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