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Shake Shack (SHAK) Q2 Earnings Beat, Revenues Lag Estimates
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Shake Shack Inc. (SHAK - Free Report) reported second-quarter fiscal 2023 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. However, both metrics increased year over year. The bottom line beat the consensus estimate for the third straight quarter.
Earnings & Revenue Details
The company’s second-quarter adjusted earnings reached 18 cent per share, beating the Zacks Consensus estimate of 9 cents. In the prior-year quarter, SHAK reported break-even earnings.
Quarterly revenues of $271.8 million lagged the Zacks Consensus Estimate of $274 million. Nonetheless, the top line increased 17.8% on a year-over-year basis. Same-Shack sales improved 3% year over year.
Shack sales rose 17.4% year over year to $261.8 million. Our model predicted the metric to improve 18.2% year over year.
Licensing revenues jumped 29.9% year over year to $10 million. We expected the metric to gain 25% year over year. Shack system-wide sales soared 21.1% year over year to $426.3 million.
Shake Shack, Inc. Price, Consensus and EPS Surprise
Operating income totaled $4.7 million against a loss of $0.8 million reported in the previous-year quarter. Shack-level operating profit margin was 21% compared with 19% in the year-ago quarter.
Total expenses, and food and paper costs (as percentages of company revenues) decreased 210 basis points (bps) and 60 bps, respectively, year over year. Labor and related costs declined 80 bps year over year to 28.7%.
Adjusted EBITDA for the reported quarter amounted to $37.1 million compared with $22.9 million reported in the year-ago quarter. Adjusted EBITDA margin expanded 370 bps to 13.6%.
Balance Sheet
As of Jun 28, cash and cash equivalents totaled $203.7 million compared with $230.5 million as of Dec 28, 2022. Total long-term debt at the end of the reported quarter increased to $245.1 million from $244.6 million as of Dec 28, 2022.
Q3 & 2023 Outlook
For third-quarter fiscal 2023, the company expects total revenues to be between $273.5 million and $278 million. The Zacks Consensus Estimate is pegged at $276.5 million.
Licensing revenues are projected in the range of $10.5-$11 million. SHAK anticipates to launch 10-12 company-operated openings and 11-13 licensed Shack openings. In third-quarter, same-Shack sales are estimated to grow by low-to-mid single digits year over year.
For fiscal 2023, management expects revenues in the range of $1.07-$1.08 billion, suggesting 18-21% year-over-year increase from the prior estimate of $1.06-$1.11 billion. Licensing revenues is projected to be between $40 million and $41 million.
In fiscal 2023, Shake Shack expects to add 75 units of system-wide Shack. Despite inflationary pressure, it anticipates to deliver 200-270 bps of restaurant margin expansion, up from the earlier guidance of 150-250 bps. Shack level operating profit margins are projected to reach 19.25-20% in fiscal 2023.
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) sports a Zacks Rank #1 (Strong Buy). PLAY has a trailing four-quarter earnings surprise of 6.8%, on average. Shares of PLAY have gained 9.6% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS indicates rises of 17% and 29%, respectively, from the year-ago period’s levels.
Domino's Pizza, Inc. (DPZ - Free Report) flaunts a Zacks Rank #1. DPZ has a long-term earnings growth rate of 13%. The stock has gained 3.4% in the past year.
The Zacks Consensus Estimate for Domino's 2024 sales and EPS suggests growth of 6.3% and 14.6%, respectively, from the year-ago period’s levels.
Chuy's Holdings, Inc. (CHUY - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 26.6%, on average. Shares of CHUY have skyrocketed 85.2% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings’ 2023 sales and EPS suggests improvements of 10% and 27.7%, respectively, from the year-ago period’s levels.
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Shake Shack (SHAK) Q2 Earnings Beat, Revenues Lag Estimates
Shake Shack Inc. (SHAK - Free Report) reported second-quarter fiscal 2023 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same. However, both metrics increased year over year. The bottom line beat the consensus estimate for the third straight quarter.
Earnings & Revenue Details
The company’s second-quarter adjusted earnings reached 18 cent per share, beating the Zacks Consensus estimate of 9 cents. In the prior-year quarter, SHAK reported break-even earnings.
Quarterly revenues of $271.8 million lagged the Zacks Consensus Estimate of $274 million. Nonetheless, the top line increased 17.8% on a year-over-year basis. Same-Shack sales improved 3% year over year.
Shack sales rose 17.4% year over year to $261.8 million. Our model predicted the metric to improve 18.2% year over year.
Licensing revenues jumped 29.9% year over year to $10 million. We expected the metric to gain 25% year over year. Shack system-wide sales soared 21.1% year over year to $426.3 million.
Shake Shack, Inc. Price, Consensus and EPS Surprise
Shake Shack, Inc. price-consensus-eps-surprise-chart | Shake Shack, Inc. Quote
Operating Highlights
Operating income totaled $4.7 million against a loss of $0.8 million reported in the previous-year quarter. Shack-level operating profit margin was 21% compared with 19% in the year-ago quarter.
Total expenses, and food and paper costs (as percentages of company revenues) decreased 210 basis points (bps) and 60 bps, respectively, year over year. Labor and related costs declined 80 bps year over year to 28.7%.
Adjusted EBITDA for the reported quarter amounted to $37.1 million compared with $22.9 million reported in the year-ago quarter. Adjusted EBITDA margin expanded 370 bps to 13.6%.
Balance Sheet
As of Jun 28, cash and cash equivalents totaled $203.7 million compared with $230.5 million as of Dec 28, 2022. Total long-term debt at the end of the reported quarter increased to $245.1 million from $244.6 million as of Dec 28, 2022.
Q3 & 2023 Outlook
For third-quarter fiscal 2023, the company expects total revenues to be between $273.5 million and $278 million. The Zacks Consensus Estimate is pegged at $276.5 million.
Licensing revenues are projected in the range of $10.5-$11 million. SHAK anticipates to launch 10-12 company-operated openings and 11-13 licensed Shack openings. In third-quarter, same-Shack sales are estimated to grow by low-to-mid single digits year over year.
For fiscal 2023, management expects revenues in the range of $1.07-$1.08 billion, suggesting 18-21% year-over-year increase from the prior estimate of $1.06-$1.11 billion. Licensing revenues is projected to be between $40 million and $41 million.
In fiscal 2023, Shake Shack expects to add 75 units of system-wide Shack. Despite inflationary pressure, it anticipates to deliver 200-270 bps of restaurant margin expansion, up from the earlier guidance of 150-250 bps. Shack level operating profit margins are projected to reach 19.25-20% in fiscal 2023.
SHAK currently has a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks in the Zacks Retail – Restaurants industry include:
Dave & Buster's Entertainment, Inc. (PLAY - Free Report) sports a Zacks Rank #1 (Strong Buy). PLAY has a trailing four-quarter earnings surprise of 6.8%, on average. Shares of PLAY have gained 9.6% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for PLAY’s 2024 sales and EPS indicates rises of 17% and 29%, respectively, from the year-ago period’s levels.
Domino's Pizza, Inc. (DPZ - Free Report) flaunts a Zacks Rank #1. DPZ has a long-term earnings growth rate of 13%. The stock has gained 3.4% in the past year.
The Zacks Consensus Estimate for Domino's 2024 sales and EPS suggests growth of 6.3% and 14.6%, respectively, from the year-ago period’s levels.
Chuy's Holdings, Inc. (CHUY - Free Report) carries a Zacks Rank #2 (Buy). It has a trailing four-quarter earnings surprise of 26.6%, on average. Shares of CHUY have skyrocketed 85.2% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings’ 2023 sales and EPS suggests improvements of 10% and 27.7%, respectively, from the year-ago period’s levels.