Investors have developed a big appetite for Shake Shack (SHAK -0.11%) this week. Shares have rocketed higher by more than 20% since last Friday’s market close. While the company reported great earnings this week, that’s not the only reason shares are pushing higher.
As of midday Friday, Shake Shack stock was up by about 23% for the week, according to data provided by S&P Global Market Intelligence. That has shares of the fast casual burger chain sitting at a 52-week-high price that it hasn’t touched since the summer of 2021.
Growing despite inflation
Shake Shack reported $286 million in fourth-quarter revenue, up 20% year over year and exceeding analysts expectation of $280.2 million. For the full year 2023, the company also grew sales by more than 20% compared to 2022.
The chain known for its burgers and milkshakes continues to pursue growth. The company opened 41 new domestic company-operated restaurants in 2023 as well as 44 licensed stores in markets including Thailand and Bahamas.
In a letter to shareholders, Shake Shack CEO Randy Garutti said, “We ended the year on a high note, with positive traffic in the fourth quarter through the success of our sales-driving strategies and continued margin expansion.”
With inflation remaining stubbornly higher than the Federal Reserve wants, the company is still bringing customers into its stores. Same-store sales grew by 2.8% versus last year, driven by “strategic sales-driving initiatives,” the company said.
Would you like some stock with that burger?
While the stock has rocketed higher this week, it still doesn’t trade at a premium to some of its peers. Shake Shake’s price-to-sales (P/S) ratio remains below 4, even after this week’s stock jump.
That’s much lower than those of McDonald’s and Chipotle Mexican Grill, which hover between 7 and 8. With Shake Shack intending to grow total revenue in the low double digits in 2024, it might still be a good time to get in on this popular restaurant stock with a long runway for growth.
Howard Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
