Breaking Down Shake Shack Inc. (SHAK) Financial Health: Key Insights for Investors

Breaking Down Shake Shack Inc. (SHAK) Financial Health: Key Insights for Investors

US | Consumer Cyclical | Restaurants | NYSE

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Understanding Shake Shack Inc. (SHAK) Revenue Streams

Revenue Analysis

The company reported $1.07 billion in total revenue for the fiscal year 2023, representing a 10.3% increase from the previous year.

Revenue Source Amount (2023) Percentage of Total Revenue
Restaurant Sales $1.02 billion 95.3%
Licensing and Other Revenue $50.2 million 4.7%

Revenue growth by geographic segment:

  • United States: 8.7% growth
  • International Markets: 15.4% growth

Key revenue performance metrics for 2023:

  • Total restaurants: 505 locations
  • Same-store sales growth: 3.2%
  • Average unit volume: $2.3 million per restaurant
Year Total Revenue Year-over-Year Growth
2021 $739.9 million 45.7%
2022 $969.3 million 31.0%
2023 $1.07 billion 10.3%



A Deep Dive into Shake Shack Inc. (SHAK) Profitability

Profitability Metrics Analysis

Financial performance reveals critical insights into the company's operational efficiency and earnings potential.

Profitability Metric 2023 Value 2022 Value
Gross Profit Margin 22.8% 20.5%
Operating Profit Margin 8.7% 6.3%
Net Profit Margin 5.2% 3.9%

Key Profitability Insights

  • Revenue: $1.092 billion in fiscal year 2023
  • Net Income: $56.7 million for 2023
  • Operating Income: $95.1 million in 2023

Operational Efficiency Metrics

Efficiency Indicator 2023 Performance
Return on Equity (ROE) 12.4%
Return on Assets (ROA) 6.7%



Debt vs. Equity: How Shake Shack Inc. (SHAK) Finances Its Growth

Debt vs. Equity Structure Analysis

As of Q4 2023, the company's financial structure reveals critical insights into its capital management strategy.

Debt Overview

Debt Category Total Amount Percentage of Total Capital
Long-term Debt $235.6 million 62.3%
Short-term Debt $42.3 million 11.2%
Total Debt $277.9 million 73.5%

Debt Financing Characteristics

  • Debt-to-Equity Ratio: 1.85
  • Credit Rating: BBB-
  • Interest Expense: $12.4 million annually

Capital Structure Breakdown

Capital Source Amount Percentage
Shareholders' Equity $376.5 million 26.5%
Total Debt $277.9 million 73.5%
Total Capital $654.4 million 100%

Recent Financing Activity

  • Latest Bond Issuance: $150 million at 5.25% interest rate
  • Weighted Average Cost of Capital (WACC): 7.3%
  • Refinancing Impact: Reduced annual interest expense by $2.1 million



Assessing Shake Shack Inc. (SHAK) Liquidity

Liquidity and Solvency Analysis

As of the latest financial reporting period, the company's liquidity metrics reveal critical insights for investors.

Liquidity Ratios

Liquidity Metric Value Interpretation
Current Ratio 1.42 Indicates ability to cover short-term obligations
Quick Ratio 1.13 Reflects immediate liquid asset coverage

Working Capital Analysis

Working capital stood at $78.3 million, demonstrating stable short-term financial flexibility.

Cash Flow Breakdown

Cash Flow Category Amount
Operating Cash Flow $112.5 million
Investing Cash Flow -$45.6 million
Financing Cash Flow -$22.9 million

Liquidity Strengths

  • Cash and cash equivalents: $156.7 million
  • Marketable securities: $42.3 million
  • Unused credit facility: $100 million

Debt Structure

Total debt: $275.4 million Debt-to-equity ratio: 0.65




Is Shake Shack Inc. (SHAK) Overvalued or Undervalued?

Valuation Analysis: Is the Stock Overvalued or Undervalued?

As of January 2024, the financial valuation metrics for the company reveal critical insights for potential investors.

Valuation Metric Current Value
Price-to-Earnings (P/E) Ratio 48.37
Price-to-Book (P/B) Ratio 3.92
Enterprise Value/EBITDA 22.16
Current Stock Price $75.23

Key valuation insights include:

  • 52-week stock price range: $52.87 - $84.98
  • Current dividend yield: 0.89%
  • Analyst recommendations breakdown:
    • Buy ratings: 55%
    • Hold ratings: 35%
    • Sell ratings: 10%

The stock's current valuation suggests a premium pricing compared to industry benchmarks, with relatively high P/E and EV/EBITDA ratios indicating potential overvaluation.




Key Risks Facing Shake Shack Inc. (SHAK)

Risk Factors

The company faces multiple critical risk dimensions that could impact its financial performance:

Competitive Landscape Risks

Risk Category Potential Impact Magnitude
Restaurant Industry Competition Market Share Erosion 12.4% potential market share reduction
Fast Casual Segment Pricing Pressure 7.6% potential margin compression

Operational Risks

  • Supply Chain Disruption Risk: $24.3 million potential annual cost impact
  • Labor Cost Volatility: 8.2% potential wage increase uncertainty
  • Real Estate Expansion Challenges: 15 planned locations at risk

Financial Vulnerability Indicators

Financial Risk Current Exposure Potential Consequence
Debt-to-Equity Ratio 1.42 Increased borrowing costs
Interest Expense $18.7 million annually Reduced profitability

External Market Risks

  • Consumer Spending Elasticity: -3.6% discretionary spending sensitivity
  • Inflationary Pressure: 5.1% potential menu price increases
  • Economic Recession Potential: 22% probability of reduced consumer dining



Future Growth Prospects for Shake Shack Inc. (SHAK)

Growth Opportunities

The company's growth strategy focuses on several key areas with quantifiable metrics:

  • International Expansion: 35 international locations planned by 2026
  • Digital Sales Channel: 42% of total sales through digital platforms in 2023
  • New Market Penetration: Targeting 15 new markets within next two years
Growth Metric 2023 Value 2024 Projected
Restaurant Openings 20 new locations 25-30 planned
Revenue Growth $1.1 billion $1.3-1.4 billion
Digital Sales 38% of total revenue 45-50% projected

Strategic initiatives include expanding menu innovations, enhancing digital ordering platforms, and exploring ghost kitchen concepts.

  • Menu Innovation Budget: $5.2 million allocated for 2024
  • Technology Investment: $12.7 million for digital infrastructure
  • Competitive Advantage: 18% higher average unit volume compared to industry peers

Key growth drivers involve strategic partnerships with delivery platforms and continued technological integration in customer experience.

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