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What Are Analysts Expecting from Shake Shack’s EPS in Q1?

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Analysts’ estimates

For the first quarter of 2019, analysts are expecting Shake Shack (SHAK) to post adjusted EPS of $0.13, which represents a fall of 13.3% from $0.15 in the corresponding quarter of 2018. The decline in Shake Shack’s EBIT margin is likely to lower the company’s EPS during the first quarter. However, some of the declines in EPS are likely to be offset by revenue growth and a lower effective tax rate.

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Analysts are forecasting Shake Shack’s EBIT margins in the first quarter of 2019 to fall by 2.9% to 4.9%. The increase in labor expenses and higher G&A (general and administrative) and D&A (depreciation and amortization) expenses are likely to lower Shake Shack’s EPS during the first quarter.

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To drive sustainable growth, Shake Shack continues to invest in long-term growth initiatives such as Project Concrete and the implementation of digital advancements that enhance customers’ experience. These investments are expected to increase SHAK’s G&A expenditure and thus lower its EBIT margin during the quarter. For the first quarter, analysts are projecting the company’s effective tax rate to be at 26.8% compared to 36.3% in the corresponding quarter of 2018.

Peer comparisons

During the comparable quarter, Chipotle Mexican Grill (CMG) posted EPS growth of 29.9%, while analysts are expecting Wendy’s (WEN) and Jack in the Box (JACK) to post EPS growth of 4.1% and 17.0%, respectively.

Outlook

For 2019, analysts are projecting Shake Shack to post EPS of $0.60, which represents a fall of 15.4% from $0.71 in 2018. The decline in EBIT margin and a higher effective tax rate are likely to lower the company’s EPS in 2019. However, some of the reductions are likely to be offset by an increase in revenue.

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