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May 13, 2021, 7:42 a.m. EDT

Shake Shack, a New York City native, is focusing its expansion on the suburbs

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Tonya Garcia

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Analysts say there are a number of variables about Shake Shack’s business compared with 2019. For instance, they don’t know what Shake Shack’s average weekly sales were in April 2019, and the company’s idea of a “suburban” location might be considered “urban” for other companies.

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The company’s average weekly sales in the first quarter were $64,000.

But Truist analysts are optimistic about Shake Shack’s post-COVID prospects in part because of the company’s digital business, which reached 60% of total sales for the first quarter.

Truist rates Shake Shack stock hold with a $103 price target, down from $105.

Shake Shack reported first-quarter net income of $1.309 million, or a penny per share, after a loss of $960,000, or 3 cents per share, last year. Adjusted EPS was 4 cents, ahead of the FactSet consensus for a 9 cents-per-share loss.

Revenue totaled $155.3 million, up from $143.2 million last year and below the FactSet consensus for $162.0 million. Same-restaurant sales were up 5.7%, ahead of the FactSet consensus for a 0.4% decline.

For the second quarter, Shake Shack is guiding for revenue of $174 million to $183 million, and a same-restaurant sales increase between mid-40% and 50%. The FactSet consensus is for revenue of $179.3 million and a same-restaurant sales increase of 53.9%.

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Quo Vadis Capital is pessimistic about how things are going for the chain.

“Shake Shack is a house on fire,” wrote John Zolidis, president of Quo Vadis, in a note. “The business was under severe pressure in 2019 with negative transactions at existing locations and weaker sales at newly-opened units combining with labor and other cost deleverage.”

The most recent quarter is “simply continuing the pre-COVID trend,” Zolidis wrote, with Quo Vadis rating Shake Shack sell.

MKM Partners says the first-quarter results are actually “telling numerous stories.”

MKM rates Shake Shack stock neutral with a $105 fair value estimate, down from $110.

“We view the intermediate recovery story and the components of Shake Shack’s longer-term growth opportunities as stable, but the shorter-term volatility appears to weigh on the shares as members of its competitive set offer up greater proof of accelerating results,” Brett Levy, MKM’s executive director, wrote.

Shake Shack stock slumped 8.9% in Wednesday trading, and has fallen 3.3% for the year so far.

The benchmark S&P 500 index /zigman2/quotes/210599714/realtime SPX +1.01% has gained 8.2% for 2021 to date.

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July 23, 2021 5:16p

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