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What Analysts Expect from Shake Shack’s Earnings in Next 4 Quarters

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Dec. 4 2020, Updated 10:53 a.m. ET

EPS estimates

For the next four quarters, analysts are expecting Shake Shack (SHAK) to post EPS (earnings per share) of $0.52, which represents a fall of 3.7% from $0.54 in the corresponding four quarters of the previous year.

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EPS decline

Analysts are expecting the decline in EBIT margins and higher effective tax rate to offset the effects of revenue growth and result in fall in Shake Shack’s EPS. For the next four quarters, analysts are expecting the company’s revenue to rise 25.4%, while EBIT margins are expected to fall from 10.9% in the corresponding four quarters of the previous year to 8.9%. The sales deleverage from negative SSSG (same-store sales growth) the and rise in labor and D&A (depreciation and amortization) expenses are expected to lower Shake Shack’s EBIT margins.

The opening of more restaurants and increasing hourly wages are expected to increase labor expenses. The labor expenses will be on the higher side in first few months of opening a new restaurant. Also, opening restaurants in new markets is expected to increase distribution expenses.

From the above graph, we can see that the company has outperformed analyst estimates four times in the last five quarters. When this happens, the stock price of the company tends to rise.

Peer comparisons

During the same period, Chipotle Mexican Grill (CMG) is expected to post EPS growth of 91.3%, while the EPS of the Cheesecake Factory (CAKE) is expected to fall 6.6%.

Next, we’ll look at Shake Shack’s valuation multiple and analysts’ recommendations.

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