Shake Shack's Beat-Up Stock Showered With Love After Hearty Quarter
Shake Shack's (SHAK) - Get Report first quarter may go a long way to shutting up the chorus of Wall Street critics who have said the stock is too pricey.
Thursday, the better burger joint announced first-quarter earnings, adjusted for one-time items, surged 114% year over year to 8 cents a share. Wall Street had expected 5 cents a share. Total revenue spiked 43.3%, to $52.2 million, compared to forecasts for $52 million. Same-restaurant sales rose 9.9%, likely helped by new seasonal frozen custards, limited-time burgers and the launch of a new fried chicken sandwich.
The sales result is that much more impressive in light of the rough weather and mixed economic climate seen in the first quarter that hurt spending at apparel retailers such as Macy's (M) - Get Report and restaurant concepts including Buffalo Wild Wings (BWLD) and Brinker International (EAT) - Get Report .
"With the extraordinary results in the first quarter, we are off to a strong start to the year," said Shake Shack CEO Randy Garutti in a statement, adding, "The recent launch of the Chick'n Shack at all domestic company-operated locations has driven traffic growth and created an entirely new way our guests can enjoy the Shack."
Shake Shack lifted its full-year sales expectations to $245 million to $249 million, from $237 million to $242 million. Same-restaurant sales are now seen as increasing 4% to 5% vs. a growth outlook of 2.5% and 3% previously. The company says it plans to open 16 new company-operated locations in the U.S. this year, up from its prior guidance of 13.
Shares rose about 5% in after-hours trading.
The strength of the quarter given the conditions in the economy may help revive interest in Shake Shack's stock, which has suffered on fears of slowing growth. Before the first-quarter results were released, shares of Shake Shack had declined 13% this year compared to a 1% gain on the S&P 500. McDonald's (MCD) - Get Report stock has tacked on 10% amid an impressive turnaround led by the launch of all-day breakfast and enhanced food quality. Over the past year, Shake Shack's stock has lost about 47%.
