Shake Shack's stock rallies despite market swoon as profit jumps

By Steve Gelsi

Burger chain beats Wall Street revenue target and stock rallies 17% despite broad market sell-off.

Shake Shack Inc.'s stock rallied Thursday despite big losses in the broad equities market after the restaurant chain said its second-quarter profit rose 39% and beat Wall Street's revenue estimate.

Shake Shack (SHAK) said its second-quarter net income rose to $9.67 million, or 23 cents a share, from $6.95 million, or 16 cents a share in the year-ago period.

Adjusted profit for the New York-based restaurant chain totaled 27 cents a share, matching the FactSet consensus estimate.

Second-quarter revenue rose to $316.5 million from $271.8 million in the year-ago period and beat the estimate of $314.4 million.

Second-quarter operating income more than doubled to $10.8 million from $4.7 million.

Shake Shack's stock rose $15.12 to $102.74, even as the S&P 500 fell 1.7% on jitters about a hard landing in the economy.

For the third quarter, Shake Shack expects revenue of $311.6 million to $317 million, while the FactSet consensus estimate is $316.2 million.

Shake Shack also said it expects full-year 2024 revenue of $1.24 billion to $1.25 billion, the high end of its earlier estimate of $1.22 billion to $1.25 billion, against the FactSet consensus estimate of $1.25 billion.

William Blair analyst Sharon Zackfia reiterated an outperform rating on Shake Shack and said the company's results were "healthy,"

"Longer term, we continue to view Shake Shack's growth runway as one of the strongest and most proven among emerging restaurant brands," Zackfia said.

To be sure, to company also faces risks including potential same-store sales volatility, geographic concentration in New York City, wage inflation, as well as "operational strains associated with aggressive unit development plans," Zackfia said.

Prior to Thursday's moves, Shake Shack's stock was up 18.2% in 2024, ahead of the 17.2% rise by the Nasdaq COMP.

-Steve Gelsi

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08-01-24 1414ET

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