SHAK

Shake Shack Inc - Ordinary Shares - Class A

Consumer


Presented:01/22/2020
Price:$70.75
Cap:$2.39B
Current Price:$110.35
Cap:$4.41B

Presented

Date01/22/2020
Price$70.75
Market Cap$2.39B
Ent Value$3.57B
P/E Ratio107.75x
Book Value$8.64
Div Yield0%
Shares O/S33.75M
Ave Daily Vol1,899,248
Short Int19.48%

Current

Price$110.35
Market Cap$4.41B
Shake Shack, Inc. is a holding company, which engages in operating fast food hamburger restaurants. It offers angus beef burgers and flat-top dogs, cage-free chicken, spun-fresh frozen custard, crinkle cut fries, craft beer, and wine. The company was founded by Daniel Harris Meyer on September 23, 2014 and is headquartered in New York, NY.

Publicly traded companies mentioned herein: Chipotle Mexican Grill Inc (CMG), Grubhub Inc (GRUB), Shake Shack Inc (SHAK)

Highlights

The presenter is short shares of Shake Shack (SHAK). SHAK currently trades at ~$72 or 31x to 32x forward EBITDA numbers, he believes this is too high of a valuation for a company that faces two large near term headwinds. He outlines two primary headwinds, SHAK’s transition from multiple delivery providers (Seamless, Postmates, DoorDash, GRUB, etc.) to exclusively GRUB and margin pressure caused by declining AUV (average unit volume) as they open restaurants in Tier 2 and Tier 3 cities in the US. As a result of these two headwinds, he models $81MM in EBITDA for 2020 vs. the Street’s $90MM. Applying a 22x multiple to his $81MM in EBITDA gets the presenter to his price target of $45/share or ~40% lower than the stock’s current price. 

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Idea Discussion

Commentor 1 - 2 weeks ago

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