Company Overview
Shake Shack Inc. owns, operates, and licenses Shake Shack restaurants across the United States and internationally, offering a menu that includes burgers, chicken, hot dogs, crinkle cut fries, shakes, frozen custard, beer, wine, and other products. The company operates within the Consumer Cyclical sector, specifically the Restaurants industry, which categorizes its performance based on discretionary consumer spending patterns that fluctuate with economic cycles. This entity maintains a substantial operational scale with a total market capitalization of $3.76B and an annual revenue (TTM) of $1.45B, supported by an employee base of 13873. These valuation and revenue figures indicate that Shake Shack holds a significant position in the quick-service restaurant landscape, commanding a capitalization that reflects investor confidence in its brand expansion and operational consistency relative to peers in the food service sector.
Financial Health
The company reported a revenue (TTM) of $1.45B and a net income (TTM) of $45.73M, while generating an EBITDA of $174.36M. The substantial gap between the $1.45B revenue and the $45.73M net income reveals a cost structure where operating expenses, including cost of goods sold, labor, and overhead, consume a significant portion of top-line sales before reaching the bottom line. Shake Shack generated free cash flow of $29.68M, which provides the company with financial flexibility to fund capital expenditures, manage liquidity, or pursue strategic initiatives without immediate reliance on external financing. The company holds cash assets totaling $360.12M against a total debt load of $902.13M, resulting in a debt-to-equity ratio of 162.91. This balance sheet configuration indicates a leveraged position where total liabilities exceed equity, suggesting the company utilizes debt to finance its operations and growth initiatives. Liquidity is supported by a current ratio of 1.76, which indicates that the company possesses $1.76 in current assets for every $1.00 of current liabilities, suggesting a conservative approach to short-term solvency. Return on Equity stands at 9.5% while Return on Assets is 2.4%, metrics that reveal management's effectiveness in generating profit from shareholder capital versus the broader asset base, with the lower ROA reflecting the capital-intensive nature of the restaurant business.
Valuation Assessment
The stock carries a P/E Ratio (TTM) of 80.88 and a Forward P/E of 51.06, implying that the market expects earnings to grow significantly to justify the higher trailing multiple. The difference between these two ratios suggests analysts anticipate a substantial improvement in profitability or a re-rating of the stock based on future performance expectations. The price-to-book ratio is 6.76, indicating that the market values the company at a significant premium over its book value, reflecting the strength of its brand intangibles and franchise model. Alternative valuation metrics include a price-to-sales ratio of 2.60 and an EV/EBITDA of 23.63, which suggest the company is valued at a premium relative to its sales and earnings before interest, taxes, depreciation, and amortization compared to traditional manufacturing or retail peers. The 52-week high is $144.65 and the 52-week low is $72.93, providing a trading range context for the current valuation. The beta value of 1.77 indicates that the stock price is expected to be 77% more volatile than the broader market, highlighting the asset's sensitivity to market sentiment and sector-specific risks.
Growth & Income
Shake Shack reported a revenue growth (YoY) of 21.9% and an earnings growth (YoY) of 28.7%, demonstrating that earnings are growing faster than revenue. This divergence implies that the company is successfully improving its operational efficiency or margin expansion, allowing profit to accelerate at a faster pace than top-line sales. The company does not pay a dividend, evidenced by a dividend yield of N/A and a payout ratio of 0.0%, indicating that the company reinvests all earnings into growth initiatives rather than returning capital to shareholders. Consequently, the overall growth and income profile is defined by capital appreciation potential and reinvestment of profits to fuel expansion, rather than income generation through dividends.