Shake Shack (SHAK) stock surged on Thursday after the burger chain shrugged off the Los Angeles wildfires to post a strong rise in January sales, while fourth-quarter earnings per share came in marginally ahead of expectations.
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SHAK said it was “pleased” with same-store sales rising 3.7% in January despite a 200-basis-point impact adverse weather events. Although the figure represents a notable step-down from the 4.3% same-store sales growth its Fiscal fourth quarter, investors seemed to react positively as shares rallied 11%.
“Our same-store-sales percentage trends held in January despite the approximate 150-200 basis points impact from weather and the Los Angeles wildfires,” CEO Rob Lynch said in a statement.
Meanwhile the company said it plans to open 45 new company-operated Shake Shacks in 2025, with ambitions to run 1,500 worldwide in the future.
Q4 Slightly Ahead for SHAK
For Q4 earnings, SHAK topped Wall Street’s estimate with adjusted earnings of $0.26 a share just a fraction ahead of the consensus estimate of $0.25 a share. Meanwhile, sales were a slight miss as fourth-quarter revenue climbed 14.8% to $328.68 million from $286.24 million, short of an estimated $328.8 million. Fourth-quarter same-store sales growth of 4.3% was in line with consensus estimates.
CEO Lynch noted it was the 10th consecutive quarter of expanding restaurant-level profit margin year-over-year, which rose 290bps to 22.7%, and its 16th consecutive quarter of generating positive same store sales. For Fiscal 2025, the company guided for “mid-teens sales growth.”
“Our guidance for this year and the next three years underscores our confidence in maintaining this trajectory of success,” added Lynch.
Is SHAK a Good Stock to Buy?
Overall, Wall Street has a Moderate Buy rating on SHAK stock, based on six Buys, eight Holds and one Sell. The average SHAK price target of $137.53 implies about 11% upside, though price targets are liable to change in the wake of earnings.
