Shake Shack Gears Up for Q2 Earnings: What's in Store?

Shake Shack Inc. SHAK is scheduled to report second-quarter 2024 financial numbers on Aug 1, before the opening bell. In the last reported quarter, the company's earnings surpassed the Zacks Consensus Estimate by 30%.

What to Expect?

The Zacks Consensus Estimate for second-quarter 2024 earnings is pegged at 27 cents, up 50% year over year. In the past 60 days, earnings estimates for the to-be-reported quarter have remained stable. The Zacks Consensus Estimate for revenues is pegged at $314.2 million, suggesting 15.6% growth from the prior-year reported actuals.

Let's delve deeper to find out how the company's top and bottom lines might have performed during the quarter.

Factors at Play

Shake Shack's quarterly performance is expected to have benefited from its robust digital marketing strategies, strong Same-Shack sales and ongoing unit expansion efforts. The company has been investing heavily in digitization to sustain and enhance its digital guest engagement strategies in the near term.

By improving its data and guest recognition capabilities, Shake Shack aims to enable more personalized marketing opportunities, thereby boosting customer conversions and consideration. SHAK has ramped up its marketing efforts and is enthusiastic about increasing investment in this area. These initiatives are likely to have positively impacted the company's quarterly performance.

We anticipate Shack sales to increase 15.5% year over year, reaching $302.4 million. Our model predicts a 2.5% rise in same-shack sales.

However, rising costs are likely to have pressured the company's bottom line. The premium ingredients used by Shake Shack have experienced a significant price hike in a short period. Higher expenses are expected to have negatively impacted margins in the to-be-reported quarter. We expect food and paper costs, labor and related expenses, and other operating expenses to increase 13.3%, 11.4% and 20.6%, respectively, from that recorded a year ago.

What Does the Zacks Model Unveil?

Our proven model predicts an earnings beat for Shake Shack this reporting cycle. A stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen.

Shake Shack has an Earnings ESP of +1.21% and a Zacks Rank #3.

Other Stocks to Consider

Here are a few other stocks that you may want to consider, as our model shows that these, too, have the right combination of elements to post an earnings beat this reporting cycle.

Brinker International, Inc. EAT currently has an Earnings ESP of +8.02% and a Zacks Rank #1.

The company's shares have risen 76.1% in the past year. EAT's earnings beat estimates in each of the trailing four quarters, the average surprise being 213.4%.

Sweetgreen, Inc. SG has an Earnings ESP of +4.35% and a Zacks Rank #3 at present.

The company's shares have risen 75.2% in the past year. SG's earnings missed estimates in each of the trailing four quarters, delivering an average negative surprise of 8.7%.

Yum! Brands, Inc. YUM currently has an Earnings ESP of +1.33% and a Zacks Rank of 3.

Shares of YUM have lost 7.8% in the past year. YUM's earnings beat estimates in two of the trailing four quarters and lagged twice, the average surprise being 3.9%.

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