Thursday, May 12, 2016

Shake Shack: Impressive Q1 Results Don't Change The Thesis

Shake Shack sailed past Q1 results due an unexceptionally high comp sales.
The recent stock dip didn't improve the valuation equation as other restaurant stocks got even cheaper.
The recommendation remains to avoid the pricey valuation multiple with legitimate fears that lower comp sales in the near future will sink the stock.
The fear with the exceptional growth of Shake Shack (NYSE:SHAK) was that the company would eventually face tough compares. Restaurants that grow comp sales at rates above 10% tend to fall victims to themselves with future periods having a difficult time surpassing those numbers to any great extent.
Read the full article on Seeking Alpha.

 Disclosure: No positions mentioned. Please read the disclaimer page for more details.

No comments: