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Shake Shack (SHAK) Q4 Earnings Meet, Stock Down on Low Comps
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Shake Shack, Inc. (SHAK - Free Report) reported fourth-quarter 2016 earnings per share (EPS) of 9 cents, in line with the Zacks Consensus Estimate. Earnings grew 12.5% from the year-ago figure of 8 cents on increased revenues.
Revenues surged 43.5% year over year to $73.3 million and beat the Zacks Consensus Estimate of $70.5 million by nearly 4%. An increase in Shack sales and licensing revenues led to the improvement. These were primarily driven by the opening of new Shack outlets.
However, the company’s shares declined over 4% in afterhours trading on Mar 1, owing to lower comps.
Behind the Headline Numbers
Same-Shack sales (or comps) grew 1.6% year over year, driven by a 3% rise in price and mix, somewhat offset by a 1.4% decrease in traffic. However, comps growth was lower than the prior quarter growth of 2.9% and the prior-year quarter rise of 11%.
Though trends were strong throughout October and November, comps softened in December due to various factors. Particularly, the holiday shift as well as comparatively colder weather conditions in the Northeast region, which makes up a high percentage of the company’s sales, hurt comps.
Total operating expenses, as a percentage of revenues, increased 40 basis points (bps) to 93.2% mainly on a 160 bps increase in labor costs and 110 bps rise in pre-opening costs. Also, occupancy and other expenses as well as other operating expenses rose 90 bps each. These were, however, somewhat offset by a decline of 370 bps and 80 bps in general and administrative expenses and food and paper costs, respectively.
As a percentage of Shack sales, Shack-level operating profit margins decreased 280 bps to 25.4% due to increased labor and related expenses.
Adjusted EBITDA (earning before interest, tax, depreciation and amortization) surged 31.6% to $11.4 million. However, as a percentage of total revenue, adjusted EBITDA margins decreased approximately 140 bps to 15.6% from 17% in the year-ago quarter.
2016 Results
Shake Shack’s full-year adjusted earnings of 46 cents were in line with the Zacks Consensus Estimate. Meanwhile, it increased 43.8% from the year-ago quarter figure of 32 cents on the back of higher revenues.
Full-year revenues of $268.5 million topped the Zacks Consensus Estimate of nearly $265.7 billion by over 1% and increased 40.9% year over year.
Shake Shack, Inc. Price, Consensus and EPS Surprise
Shake Shack has updated its full-year 2017 guidance.
The company now expects revenues in the range of $349 million to $353 million, up from $348–$352 million projected earlier.
Meanwhile, the company reiterated its guidance for Same-Shack sales growth at 2–4%. This includes roughly 1.5% to 2% of menu price increases taken in early January and nominal traffic and mix increases.
Shack-level operating profit margin is still guided between 26.5% and 27.5%, while general and administrative expenses are expected between $38 million and $40 million, up from the prior guidance of $37 million to $39 million.
The company now expects to open 22 to 23 new domestic company-operated Shacks in 2017, up from 21--22 guided earlier and 11 net new licensed Shacks, up from 10 announced earlier.
The Zacks Consensus Estimate for Potbelly’s 2017 earnings climbed 2.2% over the past 30 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 39.82%.
Dave & Buster's earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average beat of 37.81%. Meanwhile, for fiscal 2017, EPS is expected to improve 35.1%.
Darden’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 2.57%. Further, for fiscal 2017, EPS is expected to grow 11.1%.
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Shake Shack (SHAK) Q4 Earnings Meet, Stock Down on Low Comps
Shake Shack, Inc. (SHAK - Free Report) reported fourth-quarter 2016 earnings per share (EPS) of 9 cents, in line with the Zacks Consensus Estimate. Earnings grew 12.5% from the year-ago figure of 8 cents on increased revenues.
Revenues surged 43.5% year over year to $73.3 million and beat the Zacks Consensus Estimate of $70.5 million by nearly 4%. An increase in Shack sales and licensing revenues led to the improvement. These were primarily driven by the opening of new Shack outlets.
However, the company’s shares declined over 4% in afterhours trading on Mar 1, owing to lower comps.
Behind the Headline Numbers
Same-Shack sales (or comps) grew 1.6% year over year, driven by a 3% rise in price and mix, somewhat offset by a 1.4% decrease in traffic. However, comps growth was lower than the prior quarter growth of 2.9% and the prior-year quarter rise of 11%.
Though trends were strong throughout October and November, comps softened in December due to various factors. Particularly, the holiday shift as well as comparatively colder weather conditions in the Northeast region, which makes up a high percentage of the company’s sales, hurt comps.
Total operating expenses, as a percentage of revenues, increased 40 basis points (bps) to 93.2% mainly on a 160 bps increase in labor costs and 110 bps rise in pre-opening costs. Also, occupancy and other expenses as well as other operating expenses rose 90 bps each. These were, however, somewhat offset by a decline of 370 bps and 80 bps in general and administrative expenses and food and paper costs, respectively.
As a percentage of Shack sales, Shack-level operating profit margins decreased 280 bps to 25.4% due to increased labor and related expenses.
Adjusted EBITDA (earning before interest, tax, depreciation and amortization) surged 31.6% to $11.4 million. However, as a percentage of total revenue, adjusted EBITDA margins decreased approximately 140 bps to 15.6% from 17% in the year-ago quarter.
2016 Results
Shake Shack’s full-year adjusted earnings of 46 cents were in line with the Zacks Consensus Estimate. Meanwhile, it increased 43.8% from the year-ago quarter figure of 32 cents on the back of higher revenues.
Full-year revenues of $268.5 million topped the Zacks Consensus Estimate of nearly $265.7 billion by over 1% and increased 40.9% year over year.
Shake Shack, Inc. Price, Consensus and EPS Surprise
Shake Shack, Inc. Price, Consensus and EPS Surprise | Shake Shack, Inc. Quote
2017 Outlook
Shake Shack has updated its full-year 2017 guidance.
The company now expects revenues in the range of $349 million to $353 million, up from $348–$352 million projected earlier.
Meanwhile, the company reiterated its guidance for Same-Shack sales growth at 2–4%. This includes roughly 1.5% to 2% of menu price increases taken in early January and nominal traffic and mix increases.
Shack-level operating profit margin is still guided between 26.5% and 27.5%, while general and administrative expenses are expected between $38 million and $40 million, up from the prior guidance of $37 million to $39 million.
The company now expects to open 22 to 23 new domestic company-operated Shacks in 2017, up from 21--22 guided earlier and 11 net new licensed Shacks, up from 10 announced earlier.
Zacks Rank & Stocks to Consider
Shake Shack has a Zacks Rank #3 (Hold). Better-ranked stocks in this sector include Potbelly Corp. (PBPB - Free Report) , Dave & Buster's Entertainment, Inc. (PLAY - Free Report) and Darden Restaurants, Inc. (DRI - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Potbelly’s 2017 earnings climbed 2.2% over the past 30 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 39.82%.
Dave & Buster's earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average beat of 37.81%. Meanwhile, for fiscal 2017, EPS is expected to improve 35.1%.
Darden’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 2.57%. Further, for fiscal 2017, EPS is expected to grow 11.1%.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>