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Shake Shack Stock Rose Due to Strong Q1 Performance

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First-quarter performance

Shake Shack (SHAK) reported its first-quarter earnings after the market closed on May 2. For the quarter ending on March 27, the company posted an adjusted EPS of $0.13 on revenues of $132.6 million. Shake Shack’s revenues increased 33.8%, while its adjusted EPS fell 13.3%.

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Stock performance

During the first quarter, Shake Shack beat analysts’ revenue estimate of $127.2 million. The company’s EPS was in line with analysts’ expectations. Shake Shack posted an overall SSSG (same-store sales growth) of 3.6%, which beat analysts’ estimate of 0.8%. The company’s management credited favorable weather conditions in key markets, growth in digital channels, and the holiday shift for the strong SSSG. After posting the first-quarter results, Shake Shack raised it’s revenue and SSSG guidance for 2019.

Shake Shack’s strong first-quarter earnings and higher sales guidance led to an increase in the stock price. Shake Shack was trading 7.2% higher in the after-hours trading on May 2.

YTD performance

After delivering modest returns of 5.1% last year, Shake Shack had a strong start in 2019. The company has returned 38.5% YTD (year-to-date) as of May 2. Investors’ optimism surrounding the implementation of digital advancements and the strong fourth-quarter performance contributed to the rise in Shake Shack’s stock price.

During the same period, Chipotle Mexican Grill (CMG) and McDonald’s (MCD) have returned 63.9% and 9.6%, respectively. The broader comparative index, the Consumer Discretionary Select Sector SPDR ETF (XLY) has returned 19.9% YTD.

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