How SHAK can help diversify your growth portfolio
Shake Shack Inc. (NYSE: SHAK) is an American fast casual restaurant chain that serves American style food like hamburgers, hotdogs, fries, and milkshakes. SHAK owns and operates more than 350 locations in 32 U.S. States and the District of Columbia, including more than 100 international locations across London, Hong Kong, Shanghai, Singapore, Mexico City, Istanbul, Dubai, Tokyo, Seoul, and more.
Shake Shack stock has dropped 61% in the past year, as it continues to trade dangerously close to its two-year low of $37.71, touched on June 16. For 2022, SHAK has lost 44.3%, with recent pressure at the 30-day moving average keeping a lid on rally attempts.
The fast casual restaurant company remains unprofitable with $20.1 million in net losses over the past 12 months and SHAK is expected to report a $0.25 decrease in earnings per share for fiscal 2022, from -$0.06 in fiscal 2021 to -$0.31. However, Shake Shack is estimated to report $0.16 in earnings for fiscal 2023, indicating a $0.47 increase in earnings per share (EPS) and an expected shift to profitability.
SHAK is also expected to produce a very high revenue growth rate for the coming years, making Shake Shack stock's price-sales ratio of 2.00 very attractive from valuation point of view. SHAK is estimated to report 27% revenue growth for fiscal 2022 and 25.1% revenue growth for fiscal 2023, off the back of a 41.5% increase in fiscal 2021. The fast casual restaurant chain has also managed to generate 71.6% annual revenue growth since fiscal 2018, despite reporting a 12.1% decline in fiscal 2020 as a result of the pandemic. Overall, Shake Shack stock offers a solid high growth option for investors looking to invest in the restaurant industry.