SHAK · Shake Shack
Conviction · Low · more likely to lag the S&P 500 over the next three months
Wrong if: a daily close above $86.30
Note written ·
Price against the kill line
13.1% clear of its kill line on the 13 November 2026 close.
How to read this
This note expects the shares to lag the market, so its kill line sits above the price: a close above the red mark would prove the view wrong. Prices run from low on the left to high on the right. The dot is where the stock closed on 13 November 2026, left of the mark while it is below the line; a dot right of the mark has closed through it.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close above $86.30, on record since 11 November 2026. The shares are up 1.1% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close above $86.30, which is over the $75.04 close of 11 November 2026 and would show the shares leading the S&P 500 again. A raised full-year profit outlook or a 2027 outlook above current ranges would also show the shares leading.
Research onlyNot in the portfolio.
Key figures from the filings · Consumer Discretionary
Quarter to 30 September 2026, filed 5 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 423
- Revenue, change on a year (%)
- +15.2
- Operating margin (%)
- 5.1
- Free cash flow, four quarters ($M)
- −22.4
- Net cash, cash less debt ($M)
- 70.5
- Price to earnings (×)
- 71.9
- Enterprise value to sales (×)
- 1.9
- Enterprise value to operating income (×)
- 52.7
All filed numbers
What Shake Shack reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Operating margin (%) |
|---|---|---|---|
| first filed | 423 | +15.2 | 5.1 |
| first filed | 418 | +17.2 | 5.0 |
| first filed | 367 | +14.3 | −0.7 |
| first filed | 401 | +21.9 | 4.7 |
| first filed | 367 | +15.9 | 5.0 |
| first filed | 357 | +12.6 | 6.3 |
| Pre-tax income ($M) | 23.4 |
| Net income ($M) four quarters: 43.7 | 16.5 |
| Diluted shares, change on a year (%) against the quarter to 24 September 2025 | +0.1 |
| Operating cash flow ($M) | 199 |
| Capital spending ($M) | 222 |
| Free cash flow ($M) | −22.4 |
| Cash and short-term investments ($M) | 319 |
| Debt ($M) long-term debt | 249 |
| Net cash, cash less debt ($M) | 70.5 |
| Deferred revenue ($M) −3.4% on a year | 20.4 |
| Backlog, orders not yet delivered ($M) −7.4% on a year | 25.7 |
| Receivables ($M) | 30.6 |
| Inventory ($M) | 7.6 |
| Shareholders' equity ($M) | 564 |
| Market value ($M) | 3,142 |
| Enterprise value, market value plus net debt ($M) | 3,072 |
| Enterprise value to sales (×) | 1.9 |
| Enterprise value to operating income (×) | 52.7 |
| Price to earnings (×) | 71.9 |
| Price to book value (×) | 5.6 |
| Free-cash-flow yield (%) | −0.7 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 8.7% of shares outstanding sold short, 2.7 days of average trading to cover, +1.1% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $0 |
| 12 monthsfrom | $3.2M | $178K |
The thesis
Shake Shack's shares are more likely to lag the S&P 500 than lead it over the next three months. The third-quarter report on 5 November 2026 removed the margin scare from beef costs, but it left full-year profit ranges unchanged and gave no 2027 outlook. Fourth-quarter results, due around February 2027, settle whether a 1% menu price increase can hold margin and traffic.
The shares rebounded after the report. They closed at $69.82 on 5 November 2026, reached $77.15 on 9 November 2026 and closed at $75.04 on 11 November 2026, just above the 200-day average of $74.20. JPMorgan kept a Neutral rating and raised its price target to $77 on 10 November 2026. The price now reflects a business that is meeting its guided ranges, with little room left for a disappointment on margin.
Bullish and bearish views on Shake Shack Inc.
The bull case on Shake Shack Inc. (SHAK), in brief: beef cost relief arrived. The bear case: margin slipped again.
Bull case
- Beef cost relief arrived. Beef, about 35% of the food and paper basket, rose low single digits year on year in the third quarter, after mid-teens inflation in the second quarter (company shareholder letter, 5 November 2026). Blended food and paper costs fell low single digits.
- Profit grew faster than sales. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rose 16.0% to $62.8 million, against revenue growth of 15.2% to $423.3 million (shareholder letter, 5 November 2026).
- Traffic is still positive. Same-Shack sales rose 2.5%, with traffic up 0.8%. The letter calls it the fifth straight quarter of positive traffic and the 23rd straight quarter of positive same-Shack sales (5 November 2026).
- Licensing is running at the high end. Third-quarter licensing revenue was $15.3 million, up 4.7%. Management expects licensed openings at the high end of the 40–45 range, with fourth-quarter debuts in Panama, Vietnam and PENN Entertainment casinos (shareholder letter, 5 November 2026).
- Broker targets are moving up. JPMorgan, rated Neutral, raised its target to $77 on 10 November 2026, five days after the report (Benzinga headline).
Bear case
- Margin slipped again. Restaurant-level margin of 22.5% compares with 22.8% a year earlier and 23.0% in the second quarter (shareholder letters, 5 August 2026 and 5 November 2026). It sits in the lower half of the 22.0–23.0% guided range.
- Sales growth is slowing. Same-Shack sales growth fell to 2.5% from 3.5% in the second quarter, when management said a World Cup lift helped (shareholder letters, 5 August 2026 and 5 November 2026).
- Consumer warning from the chief executive. CEO Rob Lynch said lower-income Americans are feeling the pinch (news headline, 5 November 2026). The company added a 1% menu price increase in October, which tests traffic.
- Guidance did not rise. Full-year ranges are unchanged: adjusted EBITDA $225–235 million, net income $45–55 million, revenue $1.6–1.7 billion (shareholder letter, 5 November 2026). Management gave no 2027 outlook.
- The rebound uses up the cushion. The shares closed at $75.04 on 11 November 2026, above the 200-day average, while the one post-report target found, JPMorgan's $77, sits only slightly higher.
Price setup
The last close was $75.04 on 11 November 2026, 1.9% above the close three months earlier (adjusted daily closes). The 50-day average is $65.48 and the 200-day average is $74.20, so the shares sit above both. They closed at $72.82 on 4 November 2026, $69.82 on 5 November 2026, $71.89 on 6 November 2026, $77.15 on 9 November 2026, $75.90 on 10 November 2026 and $75.04 on 11 November 2026.
The 52-week high is $107.46 (intraday, 26 February 2026); the last close is 30.2% below it. The 52-week closing low is $52.34, set on 5 June 2026. The 200-day average is the nearest level the shares have just reclaimed; a close back under it would put the post-report rebound in question. No Form 4 insider transactions are listed in recent SEC filings; the only filing is the 10-Q of 5 November 2026.
Catalysts ahead
- ~30 December 2026 (est.): Fourth-quarter debuts in Panama, Vietnam and PENN Entertainment casinos. Shows whether licensing growth reaches the high end of the 40–45 licensed opening range.
- ~February 2027 (est.): Fourth-quarter and full-year 2026 results. Settles whether restaurant-level margin stayed in the 22.0–23.0% range, whether adjusted EBITDA reached $225–235 million, and whether the first 2027 outlook raises expectations.
What would change the view
A daily close above $86.30, which is over the $75.04 close of 11 November 2026 and would show the shares leading the S&P 500 again. A raised full-year profit outlook or a 2027 outlook above current ranges would also show the shares leading.
What it trades with
Shake Shack trades with US consumer discretionary and restaurant shares. The 5 November 2026 comments on lower-income customers match a wider theme in the sector, and the company's May 2026 share drop followed a McDonald's warning on the same group (ZeroHedge, 7 May 2026). Beef is the main input cost, so cattle and beef price moves bear directly on the margin case.
The evidence, claim by claim (7)
- Q3 2026 total revenue was $423.3 million, up 15.2%; same-Shack sales rose 2.5% with traffic up 0.8%. Q3 2026 shareholder letter, Form 8-K · as of
- Restaurant-level profit margin was 22.5% of Shack sales, down from 22.8%; adjusted EBITDA rose 16.0% to $62.8 million. Q3 2026 shareholder letter, Form 8-K · as of
- Beef, about 35% of the food and paper basket, rose low single digits year on year in Q3 2026. Q3 2026 shareholder letter, Form 8-K · as of
- Fiscal 2026 ranges: revenue $1.6–1.7 billion, adjusted EBITDA $225–235 million, net income $45–55 million, restaurant-level margin 22.0–23.0%. Q3 2026 shareholder letter, Form 8-K · as of
- The company added a 1% menu price increase in October 2026 and expects licensed openings at the high end of 40–45. Q3 2026 shareholder letter, Form 8-K · as of
- JPMorgan kept a Neutral rating on Shake Shack and raised its price target to $77. Benzinga headline · as of
- CEO Rob Lynch said lower-income Americans are feeling the pinch. News headline, Q3 2026 earnings coverage · as of
Sources
- Shake Shack Inc. - Form 8-K - FY2026 · sec.gov ·
- Shake Shack Inc. - Form 8-K - FY2026 · sec.gov
- Shake Shack Inc. - Form 10-Q - FY2026 · sec.gov
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