Shake Shack (SHAK) posted its 1Q18 earnings after the market closed on May 3. The company posted adjusted EPS (earnings per share) of $0.15 on revenues of $99.1 million. Compared to 1Q17, the company’s EPS rose 50%, while its revenue increased 29.1%.
Analysts were expecting Shake Shack to post EPS of $0.08 on revenues of $96.7 million. The company also outperformed analysts’ SSSG (same-store sales growth) estimates during the quarter. After posting strong 1Q18 earnings, the company raised its revenue and SSSG guidance for 2018. The strong 1Q18 earnings and raising of the 2018 sales guidance appear to have increased investors’ confidence, leading to a rise in the company’s stock price. As of May 4, Shake Shack was trading at a $55.95, which represents a rise of 18.0% since the announcement of its 1Q18 earnings.
In 2017, Shake Shack’s stock price increased 20.7%. Continuing the momentum, the company’s stock price has increased by 29.5% since the beginning of 2018. During the same period, peers Chipotle Mexican Grill (CMG), Jack in the Box (JACK), and Wendy’s (WEN) have returned 45.5%, -10.0%, and 2.0%, respectively. The broader comparative indexes, the S&P 500 Index (SPX) and the Consumer Discretionary Select Sector SPDR ETF (XLY), have returned -0.4% and 5.4%, respectively.
In this series, we’ll look at Shake Shack’s 1Q18 earnings by comparing with analysts’ estimates. Also, we’ll cover management’s guidance for 2018 and analysts’ estimates for the next four quarters. Finally, we’ll end this series by looking at Shake Shack’s valuation multiple and analysts’ recommendations.
Let’s start by looking at Shake Shack’s 1Q18 revenue.