Benzinga | Feb 24, 2021 10:06AM EST

Shake Shack's Earnings: A Preview

On Thursday, February 25, Shake Shack (NYSE:SHAK) will report its last quarter's earnings. Here is Benzinga's preview of the company's release.

What Are Earnings, Net Income, And Earnings Per Share?

Earnings and EPS are useful metrics of profitability. Total earnings also known as net income is equal to total revenue minus total expenses. Dividing net income by the total number of shares outstanding yields EPS.

Earnings And Revenue

Based on management's projections, Shake Shack analysts modeled for a loss of $0.11 per share on sales of $157.26 million. In the same quarter last year, Shake Shack posted EPS of $0.06 on sales of $151.44 million.

Why Analyst Estimates And Earnings Surprises Are Important

Analysts who cover this company will publish forward-looking estimates of its revenue and EPS each quarter. Averaging together every EPS and revenue prediction that each analyst makes about a company in a quarter yields the "consensus estimates." A company posting earnings or revenue above or below the consensus estimate is known as an "earnings surprise" and may move the stock by a considerable margin.

If the company were to match the consensus estimate when it reports Thursday, earnings would be down 283.33%. Revenue would be have grown 3.85% from the same quarter last year. In comparison to analyst estimates in the past, here is how the company's reported EPS stacks up:

Quarter Q3 2020 Q2 2020 Q1 2020 Q4 2020EPS Estimate -0.20 -0.37 0.01 0.12EPS Actual -0.11 -0.45 0.02 0.06Revenue Estimate 125.62 M 93.08 M 146.31 M 163.99 MRevenue Actual 130.40 M 91.79 M 143.20 M 151.44 M

Stock Performance

For a full 12 months, the return has risen by 97.11%. Given that these returns are generally positive, long-term shareholders are probably relaxed going into this earnings release. Long-term shareholders are already enjoying 12-month gains prior to the announcement.

Do not be surprised to see the stock move on comments made during its conference call. Shake Shack is scheduled to hold the call at 17:00:00 ET and can be accessed here.