Shake Shack Inc.
Shake Shack Inc. Fundamental Analysis
Shake Shack Inc. (SHAK) shows weak financial fundamentals with a PE ratio of 76.38, profit margin of 3.16%, and ROE of 9.14%. The company generates $1.4B in annual revenue with strong year-over-year growth of 15.18%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 40.4/100 based on profitability, valuation, growth, and balance sheet metrics. The D grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze SHAK's fundamental strength across five key dimensions:
Efficiency Score
WeakSHAK struggles to generate sufficient returns from assets.
Valuation Score
WeakSHAK trades at a premium to fair value.
Growth Score
ModerateSHAK shows steady but slowing expansion.
Financial Health Score
ModerateSHAK shows balanced financial health with some risks.
Profitability Score
WeakSHAK struggles to sustain strong margins.
Key Financial Metrics
Is SHAK Expensive or Cheap?
P/E Ratio
SHAK trades at 76.38 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, SHAK's PEG of 11.68 indicates potential overvaluation.
Price to Book
The market values Shake Shack Inc. at 6.65 times its book value. This suggests the stock is fully valued or overvalued on an asset basis.
EV/EBITDA
Enterprise value stands at 16.00 times EBITDA. This signals the market has high growth expectations.
How Well Does SHAK Make Money?
Net Profit Margin
For every $100 in sales, Shake Shack Inc. keeps $3.16 as profit after all expenses.
Operating Margin
Core operations generate 4.81 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $9.14 in profit for every $100 of shareholder equity.
ROA
Shake Shack Inc. generates $2.41 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Shake Shack Inc. produces operating cash flow of $222.61M, showing steady but balanced cash generation.
Free Cash Flow
Shake Shack Inc. produces free cash flow of $56.57M, offering steady but limited capital for shareholder returns and expansion.
FCF Per Share
Each share generates $1.41 in free cash annually.
FCF Yield
SHAK converts 1.62% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
76.38
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
11.68
vs 25 benchmark
P/B Ratio
Price to book value ratio
6.65
vs 25 benchmark
P/S Ratio
Price to sales ratio
2.42
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
1.72
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.76
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.09
vs 25 benchmark
ROA
Return on assets percentage
0.02
vs 25 benchmark
ROCE
Return on capital employed
0.04
vs 25 benchmark
How SHAK Stacks Against Its Sector Peers
| Metric | SHAK Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 76.38 | 23.49 | Worse (Expensive) |
| ROE | 9.14% | 1160.00% | Weak |
| Net Margin | 3.16% | 672.00% | Weak |
| Debt/Equity | 1.72 | 0.73 | Weak (High Leverage) |
| Current Ratio | 1.76 | 2.56 | Neutral |
| ROA | 2.41% | -8277.00% (disorted) | Weak |
SHAK outperforms its industry in 0 out of 6 key metrics, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Shake Shack Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
66.00%
Industry Style: Cyclical, Growth, Discretionary
High GrowthEPS CAGR
-59.44%
Industry Style: Cyclical, Growth, Discretionary
DecliningFCF CAGR
50.07%
Industry Style: Cyclical, Growth, Discretionary
High Growth