Taking on analysts’ expectations and winning: Shake Shack Inc. (SHAK)

Shake Shack Inc. (NYSE: SHAK) stock fell -0.50% on Tuesday to $47.39 against a previous-day closing price of $47.63. With 0.75 million shares changed hands, the volume of the stock remained lighter than its average volume of 0.82 million shares. During the session, the Restaurants company that operates in wider Consumer Cyclical sector, reached to the highest price of $47.87 whereas the lowest price it dropped to was $46.13. The 52-week range on SHAK shows that it touched its highest point at $82.50 and its lowest point at $37.72 during that stretch. It currently has a 1-year price target of $54.26. Beta for the stock currently stands at 1.57.

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Price Performance and Earnings:

Stock performance is one of the indicators that investors use to determine whether they will profit from a stock. The price performance of SHAK was down-trending over the past week, with a drop of -8.28%, but this was down by -1.76% over a month. Three-month performance dropped to -7.22% while six-month performance rose 13.48%. The stock lost -39.76% in the past year, while it has lost -34.33% so far this year. A look at the trailing 12-month EPS for SHAK yields -0.59 with Next year EPS estimates of -0.08. For the next quarter, that number is -0.17. This implies an EPS growth rate of 80.50% for this year and 83.70% for next year.

Float and Shares Shorts:

At present, 39.27 million SHAK shares are outstanding with a float of 37.26 million shares on hand for trading. On Oct 13, 2022, short shares totaled 3.96 million, which was 10.07% higher than short shares on Sep 14, 2022. In addition to Mr. Daniel Harris Meyer as the firm’s Founder & Chairman of Directors, Mr. Randall J. Garutti serves as its CEO & Director.


Institutional Ownership:

Through their ownership of 90.54% of SHAK’s outstanding shares, institutional investors have majority control over the company. Other institutions hold 7.79% of SHAK, in contrast to 48.33% held by mutual funds. Shares owned by individuals account for 44.36%. As the largest shareholder in SHAK with 14.37% of the stake, BlackRock Fund Advisors holds 5,644,415 shares worth 5,644,415. A second-largest stockholder of SHAK, The Vanguard Group, Inc., holds 3,949,831 shares, controlling over 10.06% of the firm’s shares. Fred Alger Management LLC is the third largest shareholder in SHAK, holding 3,417,250 shares or 8.70% stake. With a 7.04% stake in SHAK, the iShares Core S&P Small Cap ETF is the largest stakeholder. A total of 2,766,693 shares are owned by the mutual fund manager. The Alger Funds II – Alger Spectra Fu, which owns about 3.19% of SHAK stock, is the second-largest Mutual Fund holder. It holds 1,252,646 shares valued at 69.61 million. Vanguard Total Stock Market Index holds 2.84% of the stake in SHAK, owning 1,115,825 shares worth 62.01 million.

Analysts Ratings:

Reading analyst opinions is an effective way to decide where to invest, and there are several opinions available for SHAK since 22 analysts follow the stock currently. There are 8 analysts who recommend BUY ratings, while 1 suggest SELL ratings. Of the remaining analysts, 13 believe that the stock is worth HOLDING, 0 give it an OVERWEIGHT rating, and 0 thinks that it’s UNDERWEIGHT. In the same way, a target price assigned to a stock can also reveal much about its potential. With SHAK analysts setting a high price target of $69.00 and a low target of $45.00, the average target price over the next 12 months is $54.26. Based on these targets, SHAK could surge 45.6% to reach the target high and fall by -5.04% to reach the target low. Reaching the average price target will result in a growth of 14.5% from current levels.


EPS: Estimates vs Actual

It is also common to use earnings estimates to evaluate a firm’s growth potential and to determine trading strategy. SHAK will report FY 2022 earnings on 02/27/2023. Analysts have provided yearly estimates in a range of -$0.36 being high and -$0.51 being low. For SHAK, this leads to a yearly average estimate of -$0.42. The earnings surprise of a firm occurs when the actual results change from the consensus earnings estimate. Shake Shack Inc. surprised analysts by $0.00 when it reported -$0.06 EPS against a consensus estimate of -$0.06. The surprise factor in the prior quarter was $0.02. Based on analyst estimates, the high estimate for the next quarter is -$0.12 and the low estimate is -$0.21. The average estimate for the next quarter is thus -$0.17.

Summary of Insider Activity:

Insiders traded SHAK stock several times over the past three months with 2 Buys and 1 Sells. In these transactions, 4,843 shares were bought while 3,900 shares were sold. The number of buy transactions has increased to 20 while that of sell transactions has risen to 8 over the past year. The total number of shares bought during that period was 112,167 while 12,088 shares were sold.

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