Critical Contrast: Shake Shack (SHAK) & Its Peers

Shake Shack (NYSE:SHAK) is one of 382 publicly-traded companies in the “Hotels, Restaurants & Leisure” industry, but how does it contrast to its competitors? We will compare Shake Shack to related businesses based on the strength of its valuation, institutional ownership, risk, profitability, dividends, analyst recommendations and earnings.

Risk & Volatility

Shake Shack has a beta of 1.68, suggesting that its share price is 68% more volatile than the S&P 500. Comparatively, Shake Shack’s competitors have a beta of 1.44, suggesting that their average share price is 44% more volatile than the S&P 500.

Profitability

This table compares Shake Shack and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Shake Shack	2.56%	9.29%	2.71%
Shake Shack Competitors	2.36%	-40.12%	2.12%

Earnings & Valuation

This table compares Shake Shack and its competitors top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Shake Shack	$1.55 billion	$45.72 million	74.87
Shake Shack Competitors	$3.43 billion	$250.20 million	-147.25

Shake Shack’s competitors have higher revenue and earnings than Shake Shack. Shake Shack is trading at a higher price-to-earnings ratio than its competitors, indicating that it is currently more expensive than other companies in its industry.

Analyst Ratings

This is a summary of current ratings for Shake Shack and its competitors, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Shake Shack	0	12	16	0	2.57
Shake Shack Competitors	3792	17182	25455	901	2.50

Shake Shack currently has a consensus target price of $87.00, indicating a potential upside of 23.61%. As a group, “Hotels, Restaurants & Leisure” companies have a potential upside of 58.98%. Given Shake Shack’s competitors higher possible upside, analysts plainly believe Shake Shack has less favorable growth aspects than its competitors.

Institutional & Insider Ownership

86.1% of Shake Shack shares are held by institutional investors. Comparatively, 48.6% of shares of all “Hotels, Restaurants & Leisure” companies are held by institutional investors. 8.3% of Shake Shack shares are held by insiders. Comparatively, 22.2% of shares of all “Hotels, Restaurants & Leisure” companies are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Summary

Shake Shack beats its competitors on 8 of the 13 factors compared.

Shake Shack Company Profile

Shake Shack Inc. owns, operates, and licenses Shake Shack restaurants (Shacks) in the United States and internationally. Its Shacks offers hamburgers, chicken, hot dogs, crinkle cut fries, shakes, frozen custard, beer, wine, and other products. The company was founded in 2001 and is headquartered in New York, New York.