Shake Shack (NYSE:SHAK) Trading 11.4% Higher Following Strong Earnings

Key Points

• Shake Shack shares jumped 11.4% after the company reported quarterly EPS of $0.43, beating estimates by $0.12. Revenue reached $417.62 million, up 17.2% year over year and slightly above expectations.
• Despite the earnings beat, analysts remain cautious: the stock carries an average “Hold” rating and a consensus price target of $88.04, with several firms recently lowering their targets.
• Insiders purchased roughly $3.1 million worth of shares over the past 90 days, while institutional investors own 86.07% of the company.

Shake Shack, Inc. (NYSE:SHAK - Get Free Report) shot up 11.4% during mid-day trading on Wednesday after the company announced better than expected quarterly earnings. The company traded as high as $71.33 and last traded at $73.79. Approximately 2,691,839 shares changed hands during trading, an increase of 45% from the average daily volume of 1,852,831 shares. The stock had previously closed at $66.22.

The company reported $0.43 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.31 by $0.12. The firm had revenue of $417.62 million during the quarter, compared to analysts' expectations of $417.18 million. Shake Shack had a net margin of 2.76% and a return on equity of 9.62%. The company's revenue was up 17.2% on a year-over-year basis. During the same period in the prior year, the company posted $0.44 EPS.

Wall Street Analyst Weigh In

Several brokerages recently issued reports on SHAK. Raymond James Financial lowered shares of Shake Shack from a "strong-buy" rating to an "outperform" rating and cut their target price for the stock from $125.00 to $85.00 in a research note on Wednesday, June 3rd. Robert W. Baird dropped their price objective on shares of Shake Shack from $76.00 to $60.00 and set a "neutral" rating on the stock in a report on Thursday, June 4th. Deutsche Bank Aktiengesellschaft cut their price objective on shares of Shake Shack from $105.00 to $93.00 and set a "buy" rating on the stock in a research report on Thursday, July 9th. TD Cowen restated a "hold" rating and issued a $70.00 target price on shares of Shake Shack in a research note on Wednesday, June 3rd. Finally, Morgan Stanley reaffirmed an "equal weight" rating and issued a $76.00 target price (down from $115.00) on shares of Shake Shack in a research report on Wednesday, June 3rd. Fifteen research analysts have rated the stock with a Buy rating, ten have assigned a Hold rating and two have assigned a Sell rating to the company. Based on data from MarketBeat.com, Shake Shack has an average rating of "Hold" and a consensus price target of $88.04.

Insider Buying and Selling at Shake Shack

In related news, Director Sumaiya Balbale purchased 4,068 shares of the business's stock in a transaction that occurred on Friday, May 15th. The shares were bought at an average cost of $61.42 per share, with a total value of $249,856.56. Following the acquisition, the director owned 13,407 shares of the company's stock, valued at $823,457.94. This represents a 43.56% increase in their ownership of the stock. The acquisition was disclosed in a filing with the SEC, which is accessible through this hyperlink. Also, Director Daniel Harris Meyer bought 32,258 shares of Shake Shack stock in a transaction dated Friday, May 15th. The shares were bought at an average cost of $61.88 per share, with a total value of $1,996,125.04. Following the completion of the transaction, the director directly owned 378,670 shares in the company, valued at approximately $23,432,099.60. This trade represents a 9.31% increase in their ownership of the stock. The disclosure for this purchase is available in the SEC filing. Insiders purchased a total of 50,616 shares of company stock valued at $3,109,782 in the last ninety days. 8.32% of the stock is owned by corporate insiders.

Institutional Inflows and Outflows

Large investors have recently added to or reduced their stakes in the stock. Intech Investment Management LLC increased its stake in Shake Shack by 40.1% in the 4th quarter. Intech Investment Management LLC now owns 77,916 shares of the company's stock worth $6,324,000 after acquiring an additional 22,287 shares during the last quarter. Jefferies Financial Group Inc. bought a new stake in shares of Shake Shack during the 4th quarter valued at about $2,898,000. Madison Asset Management LLC grew its holdings in shares of Shake Shack by 37.3% during the fourth quarter. Madison Asset Management LLC now owns 58,404 shares of the company's stock worth $4,741,000 after purchasing an additional 15,852 shares in the last quarter. Swedbank AB purchased a new position in shares of Shake Shack during the fourth quarter worth about $84,092,000. Finally, D.A. Davidson & CO. increased its position in shares of Shake Shack by 115.5% in the fourth quarter. D.A. Davidson & CO. now owns 24,276 shares of the company's stock worth $1,970,000 after purchasing an additional 13,013 shares during the last quarter. Institutional investors own 86.07% of the company's stock.

Shake Shack Stock Performance

The company's 50-day moving average is $58.15 and its two-hundred day moving average is $78.42. The company has a market capitalization of $3.15 billion, a P/E ratio of 75.16, a PEG ratio of 5.15 and a beta of 1.63. The company has a quick ratio of 1.66, a current ratio of 1.69 and a debt-to-equity ratio of 0.45.

About Shake Shack

Shake Shack, Inc NYSE: SHAK is a publicly traded hospitality company known for its modern take on the classic American roadside burger stand. The company operates a chain of quick-casual restaurants offering premium hamburgers, hot dogs, crinkle-cut fries, frozen custard, milkshakes and a curated selection of beer and wine. Shake Shack emphasizes high-quality ingredients, including 100% all-natural Angus beef with no hormones or antibiotics, and works with local suppliers where possible to maintain its commitment to fresh, responsibly sourced food.

Shake Shack traces its origins to a hot dog cart opened in New York City's Madison Square Park in 2001 by Danny Meyer's Union Square Hospitality Group.

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