Shake Shack Beats McDonald’s

Shake Shack Beats McDonald’s

Shake Shack’s big gains on Wall Street have surprised some analysts who follow the fast food service sector. John Zolidis is one of them, as he isn’t impressed with the company’s most recent earnings report and guidance. “Shake Shack (SHAK) reported figures that were generally in-line with our expectations for upside on the top-line but weakness in margins,” he says. “The company reduced its full-year restaurant level margin target to ‘approximately 23%’ from ‘near the low end of 23%-24%’. The company didn't justify this change, which was made concurrent with lifting the outlook for total sales. However, we believe a factor is the ongoing sequential weakening of new units, which missed our assumption for the quarter.”

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