FILE PHOTO: Passersby walk in front of the Shake Shack restaurant in the Manhattan borough of New York, December 29, 2014. REUTERS/Keith Bedford/File Photo
August 2, 2018
(Reuters) – Shake Shack Inc <SHAK.N> on Thursday reaffirmed its full-year revenue forecast, disappointing Wall Street which was expecting the company to raise its guidance on the back of rising popularity of its pricey burgers and milkshakes.
Shares of the burger chain, which have risen 31 percent in the last three months, fell 5.4 percent to $60.50 in extended trading.
The company’s 2018 revenue forecast of between $446 million and $450 million came in below analysts’ expectation of $452.3 million.
Shake Shack, which started as a single Manhattan hot dog stand in 2001, has beaten revenue estimates for at least the last nine quarters by raising prices and skirting the intense competition of value deal driven fast food chains.
The company impressive sales led to a lofty valuation, with its shares trading at 92.85 times its 12-month forward earnings.
That had raised hopes of a strong beat in same-restaurant sales and a raise in its full-year revenue and comparable sales guidance, Cowen & Co analyst Andrew Charles wrote in a pre-earnings note.
“Should the results meet or even miss investor expectations, we would expect shares’ reaction to be strongly negative,” Charles wrote.
Sales at Shake Shacks open for at least two years rose 1.1 percent, in line with what analysts had expected.
Net income attributable to the company rose to $7.6 million, or 26 cents per diluted share, in the second quarter ended June 27 from $4.9 million, or 19 cents per share, a year earlier.
Total revenue rose 27.3 percent to $116.3 million, beating the average analyst estimate of $111 million.
Excluding certain items, the company earned 29 cents per share, beating estimates of 18 cents, according to Thomson Reuters I/B/E/S.
(Reporting by Uday Sampath in Bengaluru; Editing by Arun Koyyur)
