Shake Shack Earnings Not Enough for Investors

Shake Shack Inc. (NYSE: SHAK) released its fourth quarter earnings report after the markets closed on Monday. The company had $0.08 in earnings per share (EPS) on $51 million in revenue compared to the consensus estimates from Thomson Reuters that called for $0.07 in EPS on $50.44 million in revenue. The same period from the previous year had a net loss of $0.01 per share on $34.77 million in revenue.

Total revenue increased about 47% in the fourth quarter, and was composed of shack sales increasing 49% to $49.3 million with the remainder of the revenue made up in licensing. Same-store sales increased by 11% in this quarter as well compared to the 7.2% from last year.

In terms of guidance for the 2016 full year, the company expects revenue to be in the range of $237 million to $242 million and same-store sales growth to be in the range of $2.5% to 3.0%. There are consensus estimates that call for $0.39 in EPS on $240.72 million in revenue.

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During the quarter, there were 9 system-wide store openings, including three domestic company-operated stores and six international licensed stores. In 2016, the company expects to open 13 new domestic company-operated stores and to have 7 licensed stores to be opened in the U.K., Middle East, Japan, and Las Vegas.

Randy Garutti, CEO of Shake Shack, commented:

We are very proud of what we have been able to accomplish in our first year as a public company. 2015 marked a record year for Shake Shack in nearly all metrics, and we will continue to execute our stated growth strategy and connect with our guests the world over. During the fourth quarter we opened three domestic company-operated Shacks and six international Shacks including our first Shack in Tokyo in the Meiji-Jingu Gaien park. Looking ahead, 2016 is shaping up to be another outstanding year with a strong pipeline of new domestic openings, and plans to enter four new markets.

On the books the company had cash and cash equivalents of $70.85 million at the end of the fourth quarter compared to $2.68 million last year.

Shares of Shake Shack closed Monday up 0.6% at $42.23, with a consensus analyst price target of $42.00 and a 52-week trading range of $30.00 to $96.75. Following the release of the earnings report, the stock was down 7.6% at $39.02 in the after-hours trading session.

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