Shake Shack Inc. Class A Common Stock (SHAK)

FairStock Score: 30/100 — RISKY

Key Financials

Strengths

• Generates $30 million in annual free cash flow (0.7% yield on market cap)
• Revenue growth of 21.9% demonstrates strong top-line momentum
• Established organization with 13,873 employees providing operational scale

Concerns

• Trades significantly above Graham Number ($18) with negative 448% margin of safety—limited downside protection

AI Analysis

Shake Shack Inc. Class A Common Stock is a small-cap consumer cyclical company valued at $4.2 billion. The business generates $1.4 billion in annual revenue with a 0.8% net margin and $30 million in free cash flow. From a quality standpoint, Shake shows Altman Z-Score of 2.3 in the grey zone and modest 9% ROE. On valuation, the stock is commanding a steep 89.5x multiple, with trades far above its Graham Number ($18) with no margin of safety. Growth dynamics show revenue growing at 21.9% and profit growth of 35.8%. Our composite FairStock Score of 30/100 reflects below-average fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Shake's 22% revenue growth trajectory could accelerate as it captures additional market share in the consumer cyclical sector. With $30 million in annual free cash flow (0.7% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

At 90x earnings, any growth disappointment triggers rapid multiple compression—a 20% earnings miss plus multiple contraction to 20x implies 40%+ downside. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer