Money Never Sleeps Quick Shot on SHAKE SHACK, trading symbol SHAK, they announced earnings per share of 9 cents up from 3 cents per share, revenue jumped to $48.5 Million from $27.7 Million , the street was expecting in the $43 Million range.
Top competitors in that niche Casual Fast Food space are the likes of Smashburger which is coming public soon and In & Out Burger as well as Habit Burger, all of which grew anywhere from 25-45% last year, so as Shake Shack is growing so are these guys and they don’t have 10% of their stores in one borough.
Keep in mind that 10% of their stores now are in Manhattan, not in New York in general just in Manhattan. You have Chick-fil-a coming to New York City and that will provide additional competion in that area.
We haven’t even spoken about the minimum wage hit the company will take in New York City, which is set at $15 per hour, way up from $8.75, big difference.
With Shake Shacks current earnings it looks like the market cap is somewhere in the $900 plus million dollar area and if they only have 71 or 72 stores, those numbers per location is crazy. This isn’t a tech company and the valuations in my opinion that they are giving the company are just over promising in a big way.
The sector is a tough one and the reality is that Shake Shack may have a plan to open up hundreds of stores nationwide people need to realize that they are not the only show in town, there is serious competition from the companies I mentioned and once Shake Shack moves into unchartered areas it may become an uphill battle because like most people in NYC don’t know of In & Out Burger most people outside of NYC don’t know of Shake Shack.
In my opinion the stock is priced right in the low $40 range not close to $80, where do you go from here?
since the IPO the stock has jumped over 220 percent , granted they did great this quarter but I doubt they will meet the expectations of investors at these levels in the future.
And if they grow too quickly ala Krispy Kreme, if you don’t know it just look it up in the history books, they could hit a brick wall and no one wants that. So lets see what happens to the price of the stock this week and next week, honestly if the stock tumbles it would be doing the company a favor and allowing them to breathe a bit so they can have solid growth and not be a flash in the pan.
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