Shake Shack Stock Plummets as Diners Flee
Shares of fast-casual burger chain Shake Shack (NYSE: SHAK) were down nearly 15% following the company's fourth-quarter and full-year 2019 report. As I suspected, the high-flying restaurant stock had a tough go during the holiday quarter. Industry researcher Black Box Intelligence reported flat year-over-year comparable store sales (or "comps" from here on out, a blend of foot traffic and average guest ticket size) to finish out 2019 -- with fast-casual reportedly lagging behind the curve. Worse still was bad weather in the northeastern states where the bulk of Shake Shacks are located, putting extra pressure on the company's results.
Sure enough, all of the above conspired to ding the burger chain, and share prices are responding in kind. Management isn't forecasting a quick snap-back in traffic either, which could mean some more pain is ahead for the stock. As in times past, though, this kind of pessimism should spell a buying opportunity for the fast-growing restaurant chain.
Shake Shack's fourth-quarter revenue increased 22% year over year to $151.4 million. Within the total, high-margin royalty fees from franchised locations (international and domestic airport Shacks) surged 59% higher to $5.6 million. And since this is a growth stock, the increase of only 9.4% in Shack-level operating profit to $29.7 million isn't totally concerning.
Source Fool.com
