Stock Analysis

If You Had Bought Shake Shack (NYSE:SHAK) Stock Five Years Ago, You Could Pocket A 233% Gain Today

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NYSE:SHAK
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When you buy a stock there is always a possibility that it could drop 100%. But on a lighter note, a good company can see its share price rise well over 100%. For example, the Shake Shack Inc. (NYSE:SHAK) share price has soared 233% in the last half decade. Most would be very happy with that. It's also good to see the share price up 75% over the last quarter.

View our latest analysis for Shake Shack

Given that Shake Shack didn't make a profit in the last twelve months, we'll focus on revenue growth to form a quick view of its business development. When a company doesn't make profits, we'd generally expect to see good revenue growth. As you can imagine, fast revenue growth, when maintained, often leads to fast profit growth.

For the last half decade, Shake Shack can boast revenue growth at a rate of 23% per year. That's well above most pre-profit companies. So it's not entirely surprising that the share price reflected this performance by increasing at a rate of 27% per year, in that time. This suggests the market has well and truly recognized the progress the business has made. To our minds that makes Shake Shack worth investigating - it may have its best days ahead.

The company's revenue and earnings (over time) are depicted in the image below (click to see the exact numbers).

earnings-and-revenue-growth
NYSE:SHAK Earnings and Revenue Growth February 1st 2021

We're pleased to report that the CEO is remunerated more modestly than most CEOs at similarly capitalized companies. It's always worth keeping an eye on CEO pay, but a more important question is whether the company will grow earnings throughout the years. If you are thinking of buying or selling Shake Shack stock, you should check out this free report showing analyst profit forecasts.

A Different Perspective

We're pleased to report that Shake Shack shareholders have received a total shareholder return of 68% over one year. That's better than the annualised return of 27% over half a decade, implying that the company is doing better recently. Someone with an optimistic perspective could view the recent improvement in TSR as indicating that the business itself is getting better with time. It's always interesting to track share price performance over the longer term. But to understand Shake Shack better, we need to consider many other factors. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Shake Shack , and understanding them should be part of your investment process.

Of course Shake Shack may not be the best stock to buy. So you may wish to see this free collection of growth stocks.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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What are the risks and opportunities for Shake Shack?

Shake Shack Inc. owns, operates, and licenses Shake Shack restaurants (Shacks) in the United States and internationally.

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Rewards

  • Earnings are forecast to grow 96.86% per year

Risks

No risks detected for SHAK from our risks checks.

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