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Shake Shack – What to Expect From Earnings Report

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Shake Shack – What to Expect From Earnings Report

May 13 2015, 09.05am GMT


Shake Shack Inc. (SHAK, +0.51%), the burger chain based in New York, is set to report first quarter earnings after Wednesday’s closing bell.

Analysts that were surveyed by FactSet expect the company to report a loss of $0.03 per share. Shake Shack posted a loss of $0.01 per share in the last quarter, yet they still beat the expected loss of $0.02 per share set by FactSet. The first quarter earnings report will also mark the company’s second time it reports earnings, after a largely successful IPO for the company at the beginning of the year.

According to these analysts, it is likely that the fast casual style company will also report $34 million in sales compared to $34.8 million sales in the previous quarter.

A share price target of $66.47 was also set and currently, the company’s shares are being traded at $66 which has increased substantially from the company’s IPO (Initial public offering) price of $21 in January this year.

Many prices on the menus of various restaurants have been negatively impacted by food costs, more specifically the cost of beef, and particularly those restaurants who boast higher-quality ingredients. Shake Shack has openly said on its website that only 100 percent all-natural Angus beef is used in their products, with no antibiotics and no hormones.

In a note to clients, Zacks analysts wrote that due to an imbalance in the agriculture supply and demand worldwide as well as other macroeconomics factors, food prices are expected to stay under pressure.

Zacks analysts also see the current softer consumer spending environment as well as the very competitive market as headwinds which are likely to continue negatively impacting on the company’s earnings.

However, these analysts are still anticipating that Wall Street’s expectations will be beaten on Wednesday by Shake Shacks earnings report.

Zacks further sees the company in a great position to capitalize on the U.S.’s growth in fast-casual restaurant popularity including against its competitor Chipotle Mexican Grill Inc. (NYSE: CMG). So do you think Shake Shack will release impressive first quarter earnings?

MT4 Chart: Shake Shack

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