Value
6.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 2.2 |
| P/S | 9.3 |
| EV/EBITDA | 1.9 |
| Fwd P/E | 2.9 |
| PEG | 9.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 36.3x
- ▸PEG: 0.67
SHAK · Why this verdict
Why Shake Shack (SHAK) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictSELL
Overall score5.5/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Shake Shack trades 28% below analyst targets with strong 42% analyst upside and 3-of-4 earnings beats, but the company's free cash flow is deeply negative relative to net income, quality is below minimum thresholds, and a 3.05 put-to-call ratio signals heavy institutional hedging against the current price.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Free cash flow is -24% relative to net income — meaning the company consumes more cash than it reports in earnings — and the quality score of 3.4 is below minimum acceptable levels, signaling that accounting profitability is not translating into genuine cash generation. Quality breakdown | Free cash flow turns positive relative to net income within 12 months as expansion capital expenditure normalizes and the store base reaches maturity. | →Stable |
| CounterNegative FCF relative to net income is common and expected during rapid restaurant expansion phases; the Piotroski F-Score of 8/9 indicates broad financial health across balance sheet and efficiency metrics. | ||
The company beat earnings estimates in 3 of its last 4 quarters with strong beats of 17.2%, 6.1%, and 16.9%, and revenue and earnings are growing at an above-peer pace, demonstrating operational momentum despite quality concerns. Catalyst breakdown | Earnings beats continue in at least 2 of the next 3 quarters and revenue growth remains above 10% year-over-year. | →Stable |
| CounterThe most recent quarter produced a significant miss of -107%, suggesting the beat streak may be fragmenting as analyst expectations have been reset higher following prior outperformance. | ||
Analysts carry a consensus price target of $74.81 against a current price of $58.40, representing 28% upside with a reward-to-risk ratio of 4.01x — one of the more favorable asymmetry readings in the consumer restaurant space. Targets | The stock reaches within 10% of the analyst price target over the next 12 months as operating fundamentals improve. | →Stable |
| CounterA downward-sloping 200-day moving average declining at 8.3% per 30 days means the stock has been losing institutional support consistently; analyst targets may be stale and slow to adjust downward. | ||
A put-to-call ratio of 3.05 — flagged as elevated and high-severity — combined with a confirmed downtrend (200-day moving average declining 8.3% per 30 days) indicates institutional investors are aggressively protecting against further downside. Key risks | The put-to-call ratio falls below 2.0 over the next 6 months and the stock recaptures its 200-day moving average, signaling a genuine trend reversal. | →Stable |
| CounterHigh put-to-call ratios in small-cap restaurant names can be driven by covered call writing strategies rather than directional bearishness; the recovery setup with improving MACD may already signal the turning point. | ||
Free cash flow is -24% relative to net income — meaning the company consumes more cash than it reports in earnings — and the quality score of 3.4 is below minimum acceptable levels, signaling that accounting profitability is not translating into genuine cash generation.
→StableQuality breakdown
- Expectation
- Free cash flow turns positive relative to net income within 12 months as expansion capital expenditure normalizes and the store base reaches maturity.
CounterNegative FCF relative to net income is common and expected during rapid restaurant expansion phases; the Piotroski F-Score of 8/9 indicates broad financial health across balance sheet and efficiency metrics.
The company beat earnings estimates in 3 of its last 4 quarters with strong beats of 17.2%, 6.1%, and 16.9%, and revenue and earnings are growing at an above-peer pace, demonstrating operational momentum despite quality concerns.
→StableCatalyst breakdown
- Expectation
- Earnings beats continue in at least 2 of the next 3 quarters and revenue growth remains above 10% year-over-year.
CounterThe most recent quarter produced a significant miss of -107%, suggesting the beat streak may be fragmenting as analyst expectations have been reset higher following prior outperformance.
Analysts carry a consensus price target of $74.81 against a current price of $58.40, representing 28% upside with a reward-to-risk ratio of 4.01x — one of the more favorable asymmetry readings in the consumer restaurant space.
→StableTargets
- Expectation
- The stock reaches within 10% of the analyst price target over the next 12 months as operating fundamentals improve.
CounterA downward-sloping 200-day moving average declining at 8.3% per 30 days means the stock has been losing institutional support consistently; analyst targets may be stale and slow to adjust downward.
A put-to-call ratio of 3.05 — flagged as elevated and high-severity — combined with a confirmed downtrend (200-day moving average declining 8.3% per 30 days) indicates institutional investors are aggressively protecting against further downside.
→StableKey risks
- Expectation
- The put-to-call ratio falls below 2.0 over the next 6 months and the stock recaptures its 200-day moving average, signaling a genuine trend reversal.
CounterHigh put-to-call ratios in small-cap restaurant names can be driven by covered call writing strategies rather than directional bearishness; the recovery setup with improving MACD may already signal the turning point.
Per-dimension breakdown
Quality
3.4/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.8 |
| ROA | 1.4 |
| Gross margin | 4.1 |
| Op margin | 0.0 |
| Net margin | 1.4 |
| Current ratio | 6.1 |
| FCF quality | 0.0 |
| Moat | 5.6 |
| Piotroski F | 8.9 |
- ▸Earnings quality RED FLAG: -24% FCF/NI
- ▸Strong Piotroski F-Score: 8/9
Growth
8.1/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 6.1 |
| EPS growth | 10.0 |
Momentum
3.3/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 10.0 |
| OBV | 1.0 |
| MA position | 1.0 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope -8.1%/30d — confirmed downtrend
Sentiment
7.3/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.0 |
| Analyst rating | 7.5 |
| Price target | 9.5 |
- ▸Analyst upside: 50%
Insider
6.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 8.0 |
| insider conviction | 7.4 |
| holder change | 5.4 |
- ▸Notable insider buying — $3,206,197 (0.137% of mkt cap)
Peer rank
4.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 3.8 |
| quality rank | 1.2 |
| growth rank | 8.0 |
Technical
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 6.2 |
| support resistance | 7.3 |
| 52w position | 0.0 |
| gap | 5.0 |
Risk (lower is worse)
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 3.8 |
| days to cover | 9.6 |
| volatility | 0.1 |
| put call | 8.7 |
| implied vol | 3.4 |
| max pain risk | 3.0 |
| beta | 4.6 |
| debt equity | 3.6 |
- ▸Above max pain $35
- ▸Concentration risks: 3 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.4/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| news activity | 7.0 |
- ▸Strong earnings: 3B/0M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCKPassed (6)
- ASYMMETRY:3.5>=1.5
- INSIDER:OK
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:35d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:3.3<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
3.52
Upside
+35.0%
Downside
9.9%
Sizing output
AVOID
SetupRECOVERY — Death cross but MACD improving, RSI 56
EdgeNO_EDGE — No clear edge identified
SuitabilityAGGRESSIVE — Beta 1.62>1.3, MCap $2.3B<$5B
Investment implication
The L1 gate blocked the positive-verdict path: a hard-floor threshold was breached, so dimensional pillars — including Growth at 8.1 could not lift the engine output above the verdict floor. Failed gate signal: MOMENTUM:3.3<4.5.
The strongest dimensions are Growth at 8.1, Sentiment at 7.3, and Insider at 6.9; the weakest are Momentum at 3.3, Quality at 3.4, and Peer rank at 4.5. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 3.52 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Analysts carry a consensus price target of $74.81 against a current price of $58.40, representing 28% upside with a reward-to-risk ratio of 4.01x — one of the more favorable asymmetry readings in the consumer restaurant space.
Trip ifAnalyst consensus price target falls below $60, less than 3% above current levels, indicating analysts are lowering expectations rather than maintaining the bullish case.
- P2Free cash flow is -24% relative to net income — meaning the company consumes more cash than it reports in earnings — and the quality score of 3.4 is below minimum acceptable levels, signaling that accounting profitability is not translating into genuine cash generation.
Trip ifFree cash flow remains negative at more than -50% relative to net income for 2 consecutive quarters, indicating the cash burn is not improving with scale.
- P3The company beat earnings estimates in 3 of its last 4 quarters with strong beats of 17.2%, 6.1%, and 16.9%, and revenue and earnings are growing at an above-peer pace, demonstrating operational momentum despite quality concerns.
Trip ifEarnings surprise falls below 0% in at least 2 of the next 3 quarters, further fragmenting the beat track record.
- P4A put-to-call ratio of 3.05 — flagged as elevated and high-severity — combined with a confirmed downtrend (200-day moving average declining 8.3% per 30 days) indicates institutional investors are aggressively protecting against further downside.
Trip ifPut-to-call ratio rises above 4.0 and the 200-day moving average declines to below $50, more than 14% below current levels.