Shake Shack stock rises on upbeat fourth-quarter results

Investing.com -- Shake Shack Inc . (NYSE: NYSE:SHAK ) shares climbed 2% following the release of its preliminary unaudited results for the fiscal fourth quarter and fiscal year ended December 25, 2024. The company, ahead of its presentation at the 27th Annual ICR Conference, also updated its long-term targets, now envisioning a potential expansion of its Company-operated footprint to at least 1,500 Shacks.

The New York-based fast-casual restaurant chain reported a same-Shack sales increase of 4.3% and a total revenue jump of 14.8% for the fourth quarter, outpacing the industry average. The company's restaurant margins expanded by nearly 300 basis points YoY to 22.7%, marking the highest fourth-quarter level since 2017. Adjusted EBITDA soared by 48% YoY, a growth rate more than triple that of total revenue and the highest on record for Shake Shack.

For fiscal year 2024, the company achieved total revenue of $1.3 billion and opened a record 43 new Company-operated Shacks. The preliminary results also included a 3.6% increase in same-Shack sales compared to the previous year and a restaurant-level profit margin of approximately 21.4%.

Looking ahead to fiscal year 2025, Shake Shack anticipates total revenue growth of 16% - 18% YoY, a continuation of restaurant margin expansion to approximately 22%, and an Adjusted EBITDA increase of 14% - 20% compared to fiscal year 2024. The company's initial financial guidance for 2025 projects total revenue between $1.45 billion and $1.48 billion, with Adjusted EBITDA expected to reach between $200.0 million and $210.0 million.

Raymond (NS:RYMD ) James analyst Brian Vaccaro reiterated a Strong Buy rating and a $160.00 price target on Shake Shack, noting the company's strong fourth-quarter performance. "Shake Shack pre-released strong 4Q results including comps +4.3% y/y (vs. consensus +4.0%), store margins of 22.7% (vs. RJE 22.0%), and adj. EBITDA of $46.5M (16% above RJE)," commented Vaccaro. He also highlighted the company's new long-term target for a total addressable market of at least 1,500 company-operated units and set three-year annual growth targets that include low teens percent revenue growth and low-to-mid teens EBITDA growth. Vaccaro believes that the embedded store margins of approximately 22% could prove conservative given potential operational and process improvements.

The presentation at ICR is scheduled for Monday, January 13, 2025, at 9:00 a.m. Eastern Time and will be webcast live from the company's investor relations website.

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Source: Investing.com