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Shake Shack (SHAK) Gains From Same-Shack Sales Amid High Costs
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Shake Shack Inc. (SHAK - Free Report) has experienced remarkable success, fueled by strong same-shack sales, strategic expansion and innovative menu offerings. These initiatives have propelled the company's shares upward by an impressive 49.1% over the past year, in stark contrast to the industry’s 4.8% decline.
However, in the past month, the stock has declined 7.8%. The decline was primarily due to inflationary pressure. Its premium ingredients have witnessed a significant increase in price in a very short period. Total expenses during the first quarter came in at $290.5 million compared with $256.5 million in the prior-year quarter. The company anticipates inflationary pressures, on wages, food and paper to persist for some time.
Despite the stock's poor performance, let's take a closer look to understand why investors should consider holding onto it.
Robust Same-Shack Sales
Shake Shack continues to impress investors with strong global same-shack sales growth. During the first, second, third and fourth quarters of fiscal 2023, the metric improved 10.3%, 3%, 2.3% and 2.8%, respectively, year over year. The uptrend continued in first-quarter fiscal 2024, with the metric improving 1.6% year over year. For fiscal 2024, same-shack sales are expected to grow by low single digits year over year. Notably, the first quarter of fiscal 2024 marks the 13th consecutive quarter of same-shack sales improvement. Our model projects a 2.2% year-over-year increase in same-shack sales for 2024.
Image Source: Zacks Investment Research
Expansion Efforts
Shake Shack is committed to strategizing expansion plans effectively. In fiscal 2023, 41 new domestic company-operated Shacks and 44 new licensed Shacks were opened. The company emphasized consideration of new countries, territories and formats to drive growth over the long term.
Management expects to open new stores in Malaysia (2024) through a new development agreement. In order to expand its global presence, eight new Shacks, both company-operated and licensed, were opened in the first quarter. It remains on track to open around 80 new Shacks system-wide this year, representing approximately 15% growth in the number of units. Additionally, the company is developing a strong pipeline for growth.
Menu Innovation & Robust Digitalization
The Zacks Rank #3 (Hold) company is also creating a buzz around its menu with limited-time offerings, including the Korean barbecue burger, Korean chicken sandwich and Korean fries. The Korean chicken sandwich, a fan favorite from early 2021, has made a comeback and the company is thrilled to expand its menu with the Korean burger, which has been well-received by guests. Shake Shack is eagerly anticipating its next round of summer limited-time offerings as well.
This year, the company is enhancing its data and guest recognition capabilities to enable more personalized marketing opportunities, aiming to boost conversions and consideration. SHAK is beginning these intensified marketing efforts and is excited to increase investment in this area.
Key Picks
Some better-ranked stocks in the Zacks Retail-Wholesale sector include:
The Zacks Consensus Estimate for WING’s 2024 sales and earnings per share (EPS) suggests a rise of 27.5% and 36.7%, respectively, from the year-ago levels.
Brinker International, Inc. (EAT - Free Report) holds a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 213.4%, on average. EAT’s shares have risen 70.4% in the past year.
The Zacks Consensus Estimate for EAT’s 2024 sales and EPS indicates 5% and 39.2% growth, respectively, from the year-earlier actuals.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 19.4%, on average. LOCO’s shares have risen 10.7% in the past year.
The Zacks Consensus Estimate for LOCO’s 2025 sales and EPS indicates 3.8% and 9.4% growth, respectively, from the prior-year figures.
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Shake Shack (SHAK) Gains From Same-Shack Sales Amid High Costs
Shake Shack Inc. (SHAK - Free Report) has experienced remarkable success, fueled by strong same-shack sales, strategic expansion and innovative menu offerings. These initiatives have propelled the company's shares upward by an impressive 49.1% over the past year, in stark contrast to the industry’s 4.8% decline.
However, in the past month, the stock has declined 7.8%. The decline was primarily due to inflationary pressure. Its premium ingredients have witnessed a significant increase in price in a very short period. Total expenses during the first quarter came in at $290.5 million compared with $256.5 million in the prior-year quarter. The company anticipates inflationary pressures, on wages, food and paper to persist for some time.
Despite the stock's poor performance, let's take a closer look to understand why investors should consider holding onto it.
Robust Same-Shack Sales
Shake Shack continues to impress investors with strong global same-shack sales growth. During the first, second, third and fourth quarters of fiscal 2023, the metric improved 10.3%, 3%, 2.3% and 2.8%, respectively, year over year. The uptrend continued in first-quarter fiscal 2024, with the metric improving 1.6% year over year. For fiscal 2024, same-shack sales are expected to grow by low single digits year over year. Notably, the first quarter of fiscal 2024 marks the 13th consecutive quarter of same-shack sales improvement. Our model projects a 2.2% year-over-year increase in same-shack sales for 2024.
Image Source: Zacks Investment Research
Expansion Efforts
Shake Shack is committed to strategizing expansion plans effectively. In fiscal 2023, 41 new domestic company-operated Shacks and 44 new licensed Shacks were opened. The company emphasized consideration of new countries, territories and formats to drive growth over the long term.
Management expects to open new stores in Malaysia (2024) through a new development agreement. In order to expand its global presence, eight new Shacks, both company-operated and licensed, were opened in the first quarter. It remains on track to open around 80 new Shacks system-wide this year, representing approximately 15% growth in the number of units. Additionally, the company is developing a strong pipeline for growth.
Menu Innovation & Robust Digitalization
The Zacks Rank #3 (Hold) company is also creating a buzz around its menu with limited-time offerings, including the Korean barbecue burger, Korean chicken sandwich and Korean fries. The Korean chicken sandwich, a fan favorite from early 2021, has made a comeback and the company is thrilled to expand its menu with the Korean burger, which has been well-received by guests. Shake Shack is eagerly anticipating its next round of summer limited-time offerings as well.
This year, the company is enhancing its data and guest recognition capabilities to enable more personalized marketing opportunities, aiming to boost conversions and consideration. SHAK is beginning these intensified marketing efforts and is excited to increase investment in this area.
Key Picks
Some better-ranked stocks in the Zacks Retail-Wholesale sector include:
Wingstop Inc. (WING - Free Report) sports a Zacks Rank #1 (Strong Buy). It has a trailing four-quarter negative earnings surprise of 21.4%, on average. The stock has surged 91.2% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for WING’s 2024 sales and earnings per share (EPS) suggests a rise of 27.5% and 36.7%, respectively, from the year-ago levels.
Brinker International, Inc. (EAT - Free Report) holds a Zacks Rank #1. It has a trailing four-quarter earnings surprise of 213.4%, on average. EAT’s shares have risen 70.4% in the past year.
The Zacks Consensus Estimate for EAT’s 2024 sales and EPS indicates 5% and 39.2% growth, respectively, from the year-earlier actuals.
El Pollo Loco Holdings, Inc. (LOCO - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 19.4%, on average. LOCO’s shares have risen 10.7% in the past year.
The Zacks Consensus Estimate for LOCO’s 2025 sales and EPS indicates 3.8% and 9.4% growth, respectively, from the prior-year figures.