2 Reasons to Watch SHAK and 1 to Stay Cautious

Since April 2025, Shake Shack has been in a holding pattern, posting a small return of 4.8% while floating around $92.19. The stock also fell short of the S&P 500’s 24.7% gain during that period.

Given the weaker price action, is now a good time to buy SHAK? Or should investors expect a bumpy road ahead? Find out in our full research report, it’s free for active Edge members.

Why Does SHAK Stock Spark Debate?

Started as a hot dog cart in New York City's Madison Square Park, Shake Shack (NYSE:SHAK) is a fast-food restaurant known for its burgers and milkshakes.

Two Things to Like:

1. Solid Same-Store Sales Suggest Increasing Demand

Same-store sales is a key performance indicator used to measure organic growth at restaurants open for at least a year.

Shake Shack’s demand has been healthy for a restaurant chain over the last two years. On average, the company has grown its same-store sales by a robust 2.7% per year.

2. Increasing Free Cash Flow Margin Juices Financials

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

As you can see below, Shake Shack’s margin expanded by 2.1 percentage points over the last year. The company’s improvement shows it’s heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability was flat. Shake Shack’s free cash flow margin for the trailing 12 months was 3.5%.

One Reason to be Careful:

Previous Growth Initiatives Have Lost Money

Growth gives us insight into a company’s long-term potential, but how capital-efficient was that growth? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Although Shake Shack has shown solid business quality lately, it struggled to grow profitably in the past. Its five-year average ROIC was negative 1.2%, meaning management lost money while trying to expand the business.

Final Judgment

Shake Shack has huge potential even though it has some open questions. With its shares trailing the market in recent months, the stock trades at 58.8× forward P/E (or $92.19 per share). Is now a good time to initiate a position? See for yourself in our comprehensive research report, it’s free for active Edge members .

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