Why Investors Are Optimistic about Shake Shack’s 4Q17 Earnings



Stock performance

Shake Shack (SHAK) is scheduled to announce its 4Q17 earnings after the market closes on February 15, 2018. On February 12, 2018, Shake Shack was trading at $39.50, a rise of 5.6% since its announcement of its 3Q17 earnings on November 1, 2017.

In 3Q17, the company posted adjusted EPS (earnings per share) of $0.17 on revenue of $94.6 million compared to analysts’ EPS estimate of $0.15 and revenue estimate of $94.5 million. Also, Shake Shack posted strong 3Q17 earnings, its management increased its SSSG (same-store sales growth), revenue, and unit growth guidance for 2017. Along with these factors, the enactment of tax reforms appears to have contributed to a rise in Shake Shack stock.

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Year-to-date performance

The year 2017 was a good one for Shake Shack, with its stock price increasing 20.7%. However, since the beginning of 2018, the stock has fallen 9.2%. Comparatively, the stock prices of its peers Chipotle Mexican Grill (CMG), Wendy’s (WEN), and Jack in the Box (JACK) have fallen 12.0%, 4.2%, and 15.3%, respectively. The S&P 500 Index (SPX) and the iShares U.S. Consumer Services ETF (IYC) have returned -0.7% and 2.4%, respectively. IYC has invested 10.4% of its holdings in restaurant and travel companies.

Series overview

In this series, we’ll look at analysts’ revenue and EPS expectations for 4Q17. We’ll also cover Shake Shack’s management’s guidance and analysts’ expectations for the company in 2018. We’ll end the series by looking at the company’s valuation multiples and analysts’ recommendations.

Next, let’s take a look at analysts’ revenue expectations for 4Q17.


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