Shake Shack Inc. SHAK has delivered an impressive 146.6% surge over the past five years. However, the stock has hit a rough patch recently, tumbling 30.6% in the past month, significantly underperforming the retail restaurant industry’s 4.8% decline and the S&P 500’s 7.5% drop.

Despite delivering an earnings beat in fourth-quarter fiscal 2024 and providing a strong outlook for 2025, the SHAK stock has struggled to gain investor confidence. The decline is largely led by overall market weakness and concerns about the company's revenue growth. While Shake Shack reported a 14.8% year-over-year revenue increase in fourth-quarter fiscal 2024, it fell short of the Zacks Consensus Estimate.

As of Tuesday, the stock closed at $85.78, well below its 52-week high of $139.89 but above its 52-week low of $77.50. In the past month, SHAK has also underperformed industry players like The Wendy's Company WEN, The Cheesecake Factory Incorporated CAKE and Arcos Dorados Holdings Inc. ARCO.

SHAK Stock 1-Month Price Performance

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While Shake Shack’s recent stock performance has been disappointing, its positive earnings estimate revisions and strong fundamentals suggest a rebound.

Shake Shack’s Upward Estimate Revisions Signal Strength

Analysts are growing increasingly optimistic about Shake Shack’s earnings potential. Over the past 30 days, the Zacks Consensus Estimate for SHAK’s 2025 EPS has risen from $1.26 to $1.29, reflecting a positive shift in sentiment.

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The company is poised for robust earnings growth, with projections indicating a 40.2% jump in fiscal 2025, followed by a 22.9% increase in 2026. Meanwhile, revenue growth has been strong, with forecasts suggesting a 17% year-over-year jump in 2025 and a 12.7% rise in 2026, reinforcing confidence in Shake Shack’s long-term trajectory.

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SHAK’s Fundamentals Remain Solid

Shake Shack has been investing in digital transformation, which is crucial to its growth. Digital sales continue to impress investors. The company has been making more investments in digitization to sustain its digital guest enhancement strategies in the near term. The company’s main focus for digital investment will be to improve the Kiosk experience through greater omnichannel adoption and long-term guest connection with all the new features and offers made available on the platform. These updates are expected to enhance guest experience and convenience, resulting in higher average checks.

Then again, Shake Shack continues to impress investors with robust global same-shack sales growth. The metric improved 1.6%, 4%, 4.4% and 4.3% in the first, second, third and fourth quarters of fiscal 2024, respectively. Our model predicts same-shack sales to improve 3.1% in first-quarter 2025, driven by a 0.1% increase in traffic and 3% growth in price mix.

The company is also benefiting from expansion efforts. In 2024, Shake Shack expanded its global footprint by entering three markets — Canada, Israel and Malaysia, while growing its licensed presence to 250 locations across 20 countries. The company opened 33 licensed Shacks throughout the year and aims to accelerate this growth in 2025, targeting 35-40 openings.

Additionally, Shake Shack formed a partnership with Delta Air Lines in the fourth quarter, introducing its menu to in-flight dining at 35,000 feet. Currently, the brand offers pre-selected meals for first-class passengers on qualifying domestic flights departing from Boston Logan Airport, with plans to expand to additional locations. This collaboration highlights SHAK’s strong brand appeal and its ability to extend its presence beyond traditional restaurant spaces, a strategy the company intends to leverage in the future.

A Look at Shake Shack Stock Valuation

The SHAK stock is trading below the industry. With a forward 12-month price/sales ratio of 2.42X, it lags the industry average.

Shake Shack P/S Ratio (Forward 12 Months)

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Right Time to Add SHAK to Your Portfolio?

Shake Shack's recent stock decline presents a buying opportunity for long-term investors, given the company's strong growth prospects and strategic initiatives. Despite recent market volatility, the company continues to expand its global footprint, enhance digital capabilities and drive same-store sales growth.

Positive earnings estimate revisions signal growing investor confidence in its future performance, while its innovative partnerships, such as the collaboration with Delta Air Lines, highlight its brand strength and ability to extend its reach beyond traditional restaurant settings.

With a solid foundation and a clear path to sustained revenue and earnings growth, Shake Shack appears well-positioned for a rebound, making the stock an attractive investment at current levels. The company currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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The Cheesecake Factory Incorporated (CAKE) : Free Stock Analysis Report

The Wendy's Company (WEN) : Free Stock Analysis Report

Arcos Dorados Holdings Inc. (ARCO) : Free Stock Analysis Report

Shake Shack, Inc. (SHAK) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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