Fourth-quarter performance

Shake Shack (SHAK) posted its fourth-quarter earnings after the market closed on February 25. For the quarter ending on December 26, the company posted an adjusted EPS of $0.06 on revenues of $124.3 million. The company’s revenues rose 29.3% YoY (year-over-year), while its adjusted EPS fell 40%.

Shake Shack’s Q4 Earnings Didn’t Impress Investors

Stock performance

During the fourth quarter, Shake Shack outperformed analysts’ EPS expectation of $0.03 and revenue estimate of $118.8 million. The company’s SSSG (same-store sales growth) for the quarter was 2.3%, which beat analysts’ expectation of a decline of 1.2%. Despite posting strong fourth-quarter earnings, Shake Shack stock fell ~3% in the after-market trading hours on February 25. Investors were disappointed with the company’s 2019 SSSG guidance. Shake Shack’s management expects its 2019 SSSG to be 0%–1%, which accounts for the 1.5% increase in the company’s menu prices in December.

YTD performance

After returning 5.1% in 2018, Shake Shack started 2019 on a strong note. The company’s stock price has risen 20.9% YTD (year-to-date) as of the closing price on February 25. During the same period, Chipotle Mexican Grill (CMG), McDonald’s (MCD), and Wendy’s (WEN) have returned 38.2%, 2.8%, and 9.1%, respectively. The broader comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY), which invests 8.3% of its holdings in restaurant and travel companies, has returned 11.8% YTD (year-to-date).

Series overview

In this series, we’ll discuss Shake Shack’s performance in the fourth quarter and analysts’ expectations. We’ll also discuss management’s guidance for 2019. First, we’ll discuss Shake Shack’s fourth-quarter revenues.

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