Yahoo Finance Analyst Estimates: Here's What Brokers Think Of Shake Shack Inc. (NYSE:SHAK) After Its Third-Quarter Report
There's been a major selloff in Shake Shack Inc. (NYSE:SHAK) shares in the week since it released its third-quarter report, with the stock down 20% to US$44.20. It looks like the results were pretty good overall. While revenues of US$228m were in line with analyst predictions, statutory losses were much smaller than expected, with Shake Shack losing US$0.05 per share. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.
See our latest analysis for Shake Shack
After the latest results, the 20 analysts covering Shake Shack are now predicting revenues of US$1.09b in 2023. If met, this would reflect a huge 26% improvement in sales compared to the last 12 months. Per-share statutory losses are expected to explode, reaching US$0.034 per share. Before this earnings report, the analysts had been forecasting revenues of US$1.09b and earnings per share (EPS) of US$0.025 in 2023. So despite reconfirming their revenue estimates, the analysts are now forecasting a loss instead of a profit, which looks like a definite drop in sentiment following the latest results.
As a result, there was no major change to the consensus price target of US$54.68, with the analysts implicitly confirming that the business looks to be performing in line with expectations, despite higher forecast losses. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Shake Shack at US$69.00 per share, while the most bearish prices it at US$45.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Shake Shack shareholders.
Of course, another way to look at these forecasts is to place them into context against the industry itself. The analysts are definitely expecting Shake Shack's growth to accelerate, with the forecast 20% annualised growth to the end of 2023 ranking favourably alongside historical growth of 16% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 13% annually. Factoring in the forecast acceleration in revenue, it's pretty clear that Shake Shack is expected to grow much faster than its industry.
The Bottom Line
The biggest low-light for us was that the forecasts for Shake Shack dropped from profits to a loss next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that in mind, we wouldn't be too quick to come to a conclusion on Shake Shack. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Shake Shack going out to 2024, and you can see them free on our platform here..
We also provide an overview of the Shake Shack Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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