Why Shake Shack Stock Dropped 16% Tuesday Morning

Shares of Shake Shack (NYSE: SHAK), a burger chain with more than 280 locations in 30 states, dropped more than 16% early Tuesday morning as the market absorbed disappointing fourth-quarter results.

Fourth-quarter sales increased 22% to $151.4 million, falling short of analysts' estimates of $153 million. But much of that increase was due to store openings as the company's same-store sales declined 3.6%. Shake Shack lost $2.1 million, or $0.06 per share, during the fourth quarter, which was a sequential turn for the worse after three consecutive quarters of GAAP profits. Adjusted earnings per share checked in at $0.06 per share, better than analysts' estimates for a breakeven quarter.

Management noted that the disappointing GAAP performance was due to food and labor headwinds and investments across the business. Another disappointing metric was Shake Shack's 2020 revenue guidance between $712 million and $720 million, well below analysts' estimates of $735.5 million.

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Source Fool.com