Shake Shack Stock Fair Value Calculator – Hold Your Position on Shake Shack Until Margin Improvement is Evident
June 16, 2023
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When it comes to investing in Shake Shack ($NYSE:SHAK) (SHAK), it is important to hold your position until there is evidence of improvement in margins. The company is a well-known leader in the fast-casual restaurant industry with its popular burgers, hot dogs, and milkshakes. It has seen its stock prices soar over the past few years, but it also needs to show signs of increased profit margins. The best way to determine if it is a worthwhile investment is to look at its financials and decide if the company is on track for better performance. Investors should consider its current expenses and compare them to its current income to decide if there is potential for future growth.
Additionally, they should also look at the company’s cash flow and performance over the last few quarters. If there are indications that there has been an increase in profitability, then investors should hold their position and wait for more positive results. Investors should look at both the current financials and the performance of the company over the last few quarters to determine if there is potential for growth. If indicators are positive, then investors can feel confident in their decision to stay put.
Price History
This suggestion follows the company’s Tuesday stock performance, which opened at $68.8 and closed at $70.1, up 2.0% from its previous closing price of $68.8. The Tuesday performance indicates that investors have not yet priced in the cost pressures that the company is facing due to higher labor costs. Investors should remain patient and exercise caution before making any substantial investments in the company until margin improvement is evident. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Shake Shack. More…
| Total Revenues | Net Income | Net Margin |
| 950.37 | -15.46 | -1.5% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Shake Shack. More…
| Operations | Investing | Financing |
| 88.59 | -68.91 | -5.5 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Shake Shack. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 1.51k | 1.09k | 10.03 |
Key Ratios Snapshot
Some of the financial key ratios for Shake Shack are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 16.2% | -1.0% | -0.8% |
| FCF Margin | ROE | ROA |
| -6.3% | -1.2% | -0.3% |
Analysis – Shake Shack Stock Fair Value Calculator
At GoodWhale, we conducted an analysis of Shake Shack‘s fundamentals to determine its intrinsic value. Our proprietary Valuation Line concluded that the intrinsic value of each Shake Shack share is approximately $97.5. Currently, Shake Shack stock is trading at $70.1, which means it is undervalued by 28.1%. This discrepancy between current price and intrinsic value provides a great opportunity for investors to pick up Shake Shack stock at below its market value. More…
Peers
In the fast food industry, there is always stiff competition between the top companies. This is no different for Shake Shack Inc, a well-known American chain of hamburger restaurants. Some of their main competitors include BT Brands Inc, Doutor Nichires Holdings Co Ltd, and Kyochon Food&Beverage Co Ltd. While each company has its own unique selling points, they all share one common goal: to be the best in the industry.
– BT Brands Inc ($NASDAQ:BTBD)
PBT Brands Inc is a company that manufactures and sells a variety of products, including food, beverages, and health and beauty products. The company has a market cap of 12.92M as of 2022 and a return on equity of 2.15%. PBT Brands is a publicly traded company on the NASDAQ Stock Exchange.
– Doutor Nichires Holdings Co Ltd ($TSE:3087)
Doutor Nichires Holdings Co Ltd is a Japanese food and beverage company that operates a chain of coffee shops across Japan. As of 2022, the company had a market capitalization of $72.16 billion and a return on equity of 2.52%. The company’s coffee shops offer a range of coffee and tea beverages, as well as light meals such as sandwiches and salads.
– Kyochon Food&Beverage Co Ltd ($KOSE:339770)
Kyochon Food & Beverage Co Ltd is a South Korean company that specializes in chicken products. The company has a market cap of 248.33B as of 2022 and a return on equity of 11.08%. Kyochon was founded in 1991 and has since grown to become one of the largest chicken chains in South Korea. The company has over 1,000 outlets in South Korea and also has a presence in China, the Philippines, and the United States. Kyochon’s product offerings include chicken wings, drumsticks, and whole chickens. The company also offers a variety of side dishes and desserts.
Summary
Shake Shack is a publicly-traded restaurant chain. As an investment, analysis suggests that it should be held for the time being until there are further signs of improvement in its margins. Margin improvement is an indicator of how efficiently a company is operating and how competitive it is within its industry.
Short-term financial performance is an important factor to consider when looking at a company’s overall health and potential for success. If current financial trends show signs of increasing profits, then investors may find Shake Shack to be a promising long-term investment opportunity.
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