What Happened?

Shares of fast-food chain Shake Shack (NYSE:SHAK) jumped 14.2% in the morning session after the company reported third-quarter earnings that exceeded analysts' same-store sales expectations, leading to an EBITDA and EPS beat. Shak continued to make improvements to increase traffic and awareness as it opened 17 new Shacks in the quarter. 

Marketing efforts, such as the relaunch of Sunday Promotions and the introduction of the limited-time Truffle Menu, resonated well with customers, allowing the company to offer a more premium menu. The improved pricing helped to better manage the pressure from food and labor inflation. Overall, we think this was a decent quarter, showing that the company's efforts are paying off.

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What The Market Is Telling Us

Shake Shack’s shares are quite volatile and have had 16 moves greater than 5% over the last year. But moves this big are rare even for Shake Shack and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 9 months ago when the stock gained 26.5% on the news that the company reported fourth-quarter results that beat across the board on all key metrics from sale-store sales to revenue to profits to EPS. FCF even came in higher than expected and was positive rather than the loss projected by Wall Street analysts. Zooming out, this was a fantastic quarter that should have shareholders cheering.

Shake Shack is up 70.8% since the beginning of the year, and at $125.23 per share, has set a new 52-week high. Investors who bought $1,000 worth of Shake Shack’s shares 5 years ago would now be looking at an investment worth $1,508.

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