Shake Shack equity, debt and subsidiaries

Accuracy score :
97%

Summary (from the latest annual and quarterly report)

  • Total equity: 451 million USD
  • Market Cap is 2.28 billion USD ( the last price of the stock is 55.11 USD)
  • Shake Shack Inc. owns, operates, and licenses Shake Shack restaurants (Shacks) in the United States and internationally. Its Shacks offers hamburgers, hot dogs, chicken, crinkle cut fries, shakes, frozen custard, beer, wine, and other products
  • Total stockholders' equity has increased from 318 million USD in 2019 to 451 million in 2020
  • The company has 174 million USD in cash on account
  • Total equity – cash on account = 451 million USD – 174 million USD = 277 million USD
  • In 2019 long-term debt was zero, short – term debt was also zero. (In 2018 total debt was 20.8 million)
  • The company's revenue has increased in 2019 to 594.5 million USD from 459.3 million in 2018
  • Net income in 2019 was 19.8 million USD, Net income in 2018 was 15.2 million USD

 

Opinion about the company

Fundamentally it is a good company and in the future, we can expect its growth ( big amount of cash on the company's account, ROE is around -2.6 %).

Shake Shack (NYSE: SHAK) is an American fast casual restaurant chain based in New York City. It started out as a hot dog cart inside Madison Square Park in 2001, and its popularity steadily grew. In 2004, it moved to a stand within the park, expanding its menu from New York–style hotdogs to one with hamburgers, hotdogs, fries and its namesake milkshakes. In June 2010, Shake Shack opened its first restaurant outside of New York City at the Lincoln Road Mall in Miami Beach's South Beach neighborhood. In April 2017 the location completed a month-long renovation that added 586 square feet of space, bringing its seating capacity to 106. Since its founding, it has been one of the fastest-growing food chains, eventually becoming a public company filing for an initial public offering of stock in late 2014. The offering priced on January 29, 2015; the initial price of its shares was at $21, immediately rising by 123% to $47 on their first day of trading. Shake Shack's shakes have been reviewed as "some of the best in the industry". It also sells chicken burgers, fries, hot dogs, frozen custards, and beer and wine. In each new location, the beverage menu is customized to the local flavors of the city in which it operates. Their most famous product is the ShackBurger. Available in single or double, it contains a beef patty, American cheese, lettuce, tomato and a proprietary sauce. Shake Shack is slightly more expensive than other boutique (or mainstream) burger joints. A meal consisting of a Shack Burger, a signature frozen custard shake, and fries will cost $13.

Shake Shack Inc. owns and operates over 275 locations (185 domestic and 90 international, North America, Europe, Middle East, Oceania, Asia). Its average store revenue of US$4 million is more than twice that of McDonald's average store revenue within the United States. Its popularity is such that in the summer at its original location, the wait in line for service can stretch to over an hour, especially on weekends when the weather is pleasant. A webcam on the restaurant's web page shows the current line in real time.

  • A typical Shack takes between 14 and 20 weeks to build. In fiscal 2019, the total investment cost of a new Shack, which includes costs related to items such as furniture, fixtures and equipment, ranged from approximately $1.5 million to $4.3 million, with an average investment cost of approximately $2.2 million, or approximately $1.9 million net of tenant improvement allowances received from our landlords
  • In fiscal 2019, SHAK grew its Shack community by creating over 1,600 new jobs across the country. The company added 73 new Shacks and reached 275 Shacks worldwide
  • Over the long-term, management believes that they have the potential to grow its current domestic company-operated Shack footprint to at least 450 Shacks
  • As of December 25, 2019, SHAK had 7,603 employees, of whom 7,346 were hourly team members and Shack-level managers and 257 were Home Office personnel
  • The increase in Shack sales for fiscal 2019 is primarily driven by the opening of 39 new domestic company-operated Shacks and a same-Shack sales increase of 1.3%, which was approximately $4.3 million of the total increase in Shack sales. The same-Shack sales increase was primarily driven by a combined increase of 1.8% in price and sales mix partially offset by decreased guest traffic of 0.5%
  • According to analysts, Shake Shack is expected to produce less than $0.60 of earnings per share annually for at least the next five years.
  • The impacts of the pandemic on the company is well understood now and points to a strong pivot by management by accelerating digital investments and unit formats, with moves to offer curbside pickup  and drive-through locations
  • Shake Shack Inc. owns and operates over 275 locations (185 domestic and 90 international). The domestic segment is worth 1.7 billion USD while the international segment is worth 700 million USD

It is important to mention that shares of this company are trading at about half of the high set a year ago as investor enthusiasm drove this stock to bubble levels in the summer of 2019. In the interim, the bubble popped and shares made a double bottom at $30 during peak COVID-19 fear. The dining industry as a whole was absolutely decimated earlier this year. Stay-at-home orders across the country, as well as millions upon millions of people losing their jobs, was a recipe for disaster for Shake Shack and its competitors. Comparable sales were down by half in Q2, with total revenue declining 40%. Total system sales were off 45% as licensees struggled globally, along with the company and its owned stores. The company paused its new store openings briefly due to COVID-19, but still managed to add five new stores during the quarter. On the plus side, Shake Shack’s investments in digital and pickup channels paid off nicely during this period, and should continue to do so. The restaurants with strong pickup and digital channels have performed much better during this crisis than those that didn’t, and the company has been investing, and continues to invest, in its digital channels, which is good for future growth.

 

Total = 2.4 billion usd

 

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