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What's in the Cards for Shake Shack (SHAK) in Q1 Earnings?
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Shake Shack Inc. (SHAK - Free Report) is scheduled to report first-quarter 2017 numbers on May 4, after market close.
Last quarter, Shake Shack’s earnings were in line with the Zacks Consensus Estimate. In fact, the company outpaced/met earnings estimates in the trailing four-quarters with an average beat of 10.26%.
Let’s see how things are shaping up for this announcement.
Shake Shack’s cult following and successful expansion into various cities around the world is expected to continue driving traffic, and in turn lead to higher Same-Shack sales (or comps). Moreover, various sales and digital initiatives undertaken by the company such as and menu extension and innovation, limited time offerings, menu price increase along with nationwide launch of its mobile ordering Shack App for iOS are likely to further bolster comps in the to-be-reported quarter.
In fact, Shake Shack is expected 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.
Nevertheless, elevated labor and pre-opening costs are adding to the expenses, which are likely to hurt profitability and margins. Additionally, macro economic and political challenges in some of the key operating markets and unfavorable foreign exchange translations are likely to hamper the quarter’s performance. Further, a soft consumer spending environment in the U.S. restaurant space might limit the quarter’s revenue growth.
Earnings Whispers
Our proven model does not conclusively show an earnings beat for Shake Shack 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. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Shake Shack has an Earnings ESP of -25.00%. This is because the Most Accurate estimate is 6 cents, while the Zacks Consensus Estimate is pegged higher at 8 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Shake Shack carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Notably, we caution you against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:
Wingstop Inc. (WING - Free Report) has an Earnings ESP of +6.67% and a Zacks Rank #3.
The Priceline Group Inc. has an Earnings ESP of +2.06% and a Zacks Rank #3.
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What's in the Cards for Shake Shack (SHAK) in Q1 Earnings?
Shake Shack Inc. (SHAK - Free Report) is scheduled to report first-quarter 2017 numbers on May 4, after market close.
Last quarter, Shake Shack’s earnings were in line with the Zacks Consensus Estimate. In fact, the company outpaced/met earnings estimates in the trailing four-quarters with an average beat of 10.26%.
Let’s see how things are shaping up for this announcement.
Shake Shack, Inc. Price and EPS Surprise
Shake Shack, Inc. Price and EPS Surprise | Shake Shack, Inc. Quote
Factors Likely to Influence Q1 Results
Shake Shack’s cult following and successful expansion into various cities around the world is expected to continue driving traffic, and in turn lead to higher Same-Shack sales (or comps). Moreover, various sales and digital initiatives undertaken by the company such as and menu extension and innovation, limited time offerings, menu price increase along with nationwide launch of its mobile ordering Shack App for iOS are likely to further bolster comps in the to-be-reported quarter.
In fact, Shake Shack is expected 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.
Nevertheless, elevated labor and pre-opening costs are adding to the expenses, which are likely to hurt profitability and margins. Additionally, macro economic and political challenges in some of the key operating markets and unfavorable foreign exchange translations are likely to hamper the quarter’s performance. Further, a soft consumer spending environment in the U.S. restaurant space might limit the quarter’s revenue growth.
Earnings Whispers
Our proven model does not conclusively show an earnings beat for Shake Shack 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. Unfortunately, that is not the case here as elaborated below.
Zacks ESP: Shake Shack has an Earnings ESP of -25.00%. This is because the Most Accurate estimate is 6 cents, while the Zacks Consensus Estimate is pegged higher at 8 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Shake Shack carries a Zacks Rank #3, which increases the predictive power of ESP. However, the company’s negative ESP makes surprise prediction difficult.
Notably, we caution you against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are some companies to consider as our model shows 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 +4.40% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Wingstop Inc. (WING - Free Report) has an Earnings ESP of +6.67% and a Zacks Rank #3.
The Priceline Group Inc. has an Earnings ESP of +2.06% and a Zacks Rank #3.
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>