Head-To-Head Review: Shake Shack (SHAK) versus Its Competitors

Shake Shack (NYSE: SHAK) is one of 44 public companies in the “Restaurants & Bars” industry, but how does it weigh in compared to its rivals? We will compare Shake Shack to similar companies based on the strength of its earnings, dividends, analyst recommendations, profitability, institutional ownership, risk and valuation.

Profitability

This table compares Shake Shack and its rivals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Shake Shack 4.70% 8.71% 3.29%
Shake Shack Competitors 1.53% 19.28% 1.61%

Insider & Institutional Ownership

82.3% of Shake Shack shares are owned by institutional investors. Comparatively, 69.8% of shares of all “Restaurants & Bars” companies are owned by institutional investors. 34.9% of Shake Shack shares are owned by insiders. Comparatively, 20.2% of shares of all “Restaurants & Bars” companies are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

Shake Shack has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500. Comparatively, Shake Shack’s rivals have a beta of 0.66, suggesting that their average share price is 34% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and price targets for Shake Shack and its rivals, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shake Shack 1 6 5 0 2.33
Shake Shack Competitors 371 1713 2185 82 2.45

Shake Shack currently has a consensus target price of $37.17, suggesting a potential upside of 11.71%. As a group, “Restaurants & Bars” companies have a potential upside of 13.01%. Given Shake Shack’s rivals stronger consensus rating and higher possible upside, analysts plainly believe Shake Shack has less favorable growth aspects than its rivals.

Earnings & Valuation

This table compares Shake Shack and its rivals gross revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
Shake Shack $315.90 million $49.67 million 57.36
Shake Shack Competitors $2.03 billion $348.19 million -4.37

Shake Shack’s rivals have higher revenue and earnings than Shake Shack. Shake Shack is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Summary

Shake Shack rivals beat Shake Shack on 7 of the 13 factors compared.

About Shake Shack

Shake Shack Inc. operates roadside burger stands. The Company serves an American menu of burgers, hot dogs, crispy chicken, frozen custard, crinkle cut fries, shakes, beer and wine, among others. The Company’s signature items are its all-natural, hormone and antibiotic-free burgers, hot dogs, crispy chicken, crinkle cut fries, shakes and frozen custard. Its menu focuses on food and beverages, crafted from a range of classic American foods. The Company’s domestic menu includes a range of signature items, such as the ShackBurger, SmokeShack, Shack-cago Dog, ‘Shroom Burger, seasonal frozen custard, hand-spun shakes, concretes, ShackMeister Ale, and Shack Red and Shack White wines. As of December 28, 2016, it had 114 Shacks in 13 countries and 16 states, as well as the District of Columbia. Its burgers are made with a whole-muscle blend of all-natural, hormone and antibiotic-free Angus beef, ground fresh daily, cooked to order and served on a non-genetically modified organism potato bun.

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