This week's news from hamburger slinger Shake Shack(NYSE: SHAK) was overwhelmingly positive -- hence the stock's double-digit gain over the past five trading days. According to data compiled by S&P Global Market Intelligence, it ended the week more than 12% higher in price. The major impetus to this gain was the company's latest set of quarterly results, accompanied by several analysts' target price raises.
Shaking up a big win
On Wednesday, Shake Shack served up a very tasty meal for investors in the form of its third-quarter results. Revenue rose a sturdy 15% year-over-year to hit $317 million, thanks to a combination of new restaurant openings and a more than 4% rise in same-restaurant sales.
More impressively, the company managed to increase its "pro forma," i.e., non-GAAP (generally accepted accounting principles), or adjusted net income by 48% to just over $11.1 million, or $0.25 per share.
On average, analysts tracking Shake Shack were modeling less than $316 million on the top line, and $0.19 per share for adjusted profitability.
Extra patties from the analysts
Several of those pundits were quick to make upward adjustments on their Shake Shack takes following the earnings release. By my count, no less than seven raised their price targets on the stock by Friday market close, and these bullish moves helped boost sentiment on the company.
Among the raisers was Truist Securities' Jake Bartlett, who hiked his fair value assessment of the stock to $144 per share from the previous $127. In doing so, he maintained his buy recommendation. According to sources, Bartlett wrote in a new research note that management is being quite effective at finding the right price/value dynamic, and has done well with marketing and the speed of service in the company's restaurants.
Don’t miss this second chance at a potentially lucrative opportunity
Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.
On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:
- Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $20,993!*
- Apple: if you invested $1,000 when we doubled down in 2008, you’d have $42,736!*
- Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $407,720!*
Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.
*Stock Advisor returns as of October 28, 2024
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Truist Financial. The Motley Fool has a disclosure policy.
