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Shake Shack's (SHAK) Q1 Earnings: Unit Growth to Drive Sales
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Shake Shack Inc. (SHAK - Free Report) is scheduled to report first-quarter 2018 financial numbers on May 3, after the market closes.
In the last reported quarter, the company’s earnings have surpassed the Zacks Consensus Estimate by 100%. Also, Shake Shack's bottom line outpaced the consensus mark in each of the trailing four quarters, with an average beat of 40.8%.
What to Expect?
The question lingering in investors’ minds now is whether Shake Shack will be able to deliver a positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for the first quarter is pegged at 9 cents, lower than 10 cents in the year-ago quarter. Of late, the company’s earnings estimates have been stable. In the fourth quarter of 2017, the company’s witnessed earnings growth of 11.1% on a year-over-year basis. Meanwhile, analysts polled by Zacks expect revenues of nearly $96.3 million, up 25.5% from the prior-year quarter.
Let’s delve deeper to find out how the company’s top and bottom lines will shape up this earnings season.
Factors at Play
We believe Shake Shack will continue to report year-over-year increase in sales in the first-quarter driven by robust licensing and Shack sales. Shake Shack’s cult following and successful expansion into various cities around the world are likely to boost Shack sales and continue driving traffic. In fact, Shake Shack expects to open 32 to 35 new domestic company-operated Shacks, reflecting unit growth of 36% to 39%. Notably, the Zacks Consensus Estimate for Shack sales is $94 million, reflecting a year-over-year increase of 27%.
We also expect the company to continue cashing on the diversification of its licensing business, the resource-light and efficient model, the low-risk royalty stream and the opportunity to reach places that it could not reach domestically. The Zacks Consensus Estimate for licensing revenues in the first quarter stands at $2.91 million, reflecting an improvement of 12.4% year over year.
However, elevated labor and pre-opening costs are likely to dent the quarter’s profitability. Further, macroeconomic and political challenges in some key operating markets and unfavorable foreign exchange translations might hamper the company’s performance in the quarter under review.
What Does the Zacks Model Unveil?
Our proven model does not show that Shake Shack is likely to beat earnings estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Shake Shack has an Earnings ESP of -14.45%. Although, the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.
Shake Shack, Inc. Price, Consensus and EPS Surprise
Here are a few other stocks from the Restaurant space that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Jack in the Box Inc. (JACK - Free Report) has an Earnings ESP of +2.33% and a Zacks Rank of 3.
Wingstop (WING - Free Report) has an Earnings ESP of +5.66% and a Zacks Rank #3.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Shake Shack's (SHAK) Q1 Earnings: Unit Growth to Drive Sales
Shake Shack Inc. (SHAK - Free Report) is scheduled to report first-quarter 2018 financial numbers on May 3, after the market closes.
In the last reported quarter, the company’s earnings have surpassed the Zacks Consensus Estimate by 100%. Also, Shake Shack's bottom line outpaced the consensus mark in each of the trailing four quarters, with an average beat of 40.8%.
What to Expect?
The question lingering in investors’ minds now is whether Shake Shack will be able to deliver a positive earnings surprise in the quarter to be reported. The Zacks Consensus Estimate for the first quarter is pegged at 9 cents, lower than 10 cents in the year-ago quarter. Of late, the company’s earnings estimates have been stable. In the fourth quarter of 2017, the company’s witnessed earnings growth of 11.1% on a year-over-year basis.
Meanwhile, analysts polled by Zacks expect revenues of nearly $96.3 million, up 25.5% from the prior-year quarter.
Let’s delve deeper to find out how the company’s top and bottom lines will shape up this earnings season.
Factors at Play
We believe Shake Shack will continue to report year-over-year increase in sales in the first-quarter driven by robust licensing and Shack sales. Shake Shack’s cult following and successful expansion into various cities around the world are likely to boost Shack sales and continue driving traffic. In fact, Shake Shack expects to open 32 to 35 new domestic company-operated Shacks, reflecting unit growth of 36% to 39%. Notably, the Zacks Consensus Estimate for Shack sales is $94 million, reflecting a year-over-year increase of 27%.
We also expect the company to continue cashing on the diversification of its licensing business, the resource-light and efficient model, the low-risk royalty stream and the opportunity to reach places that it could not reach domestically. The Zacks Consensus Estimate for licensing revenues in the first quarter stands at $2.91 million, reflecting an improvement of 12.4% year over year.
However, elevated labor and pre-opening costs are likely to dent the quarter’s profitability. Further, macroeconomic and political challenges in some key operating markets and unfavorable foreign exchange translations might hamper the company’s performance in the quarter under review.
What Does the Zacks Model Unveil?
Our proven model does not show that Shake Shack is likely to beat earnings estimates this quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Shake Shack has an Earnings ESP of -14.45%. Although, the company’s Zacks Rank #3 increases the predictive power of ESP, we need to have a positive ESP to be confident about an earnings surprise.
Shake Shack, Inc. Price, Consensus and EPS Surprise
Shake Shack, Inc. Price, Consensus and EPS Surprise | Shake Shack, Inc. Quote
Stocks to Consider
Here are a few other stocks from the Restaurant space that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Ruth's Hospitality Group, Inc. has an Earnings ESP of +1.70% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Jack in the Box Inc. (JACK - Free Report) has an Earnings ESP of +2.33% and a Zacks Rank of 3.
Wingstop (WING - Free Report) has an Earnings ESP of +5.66% and a Zacks Rank #3.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>