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|About: Shake Shack Inc. (SHAK)

We are analyzing shares of SHAK, an IPO "blast from the past" that has always intrigued us due to its premium valuation in a commodity highly competitive fast casual market.

SHAK management has done well this year, beating and raising revenue and EPS numbers on a steady diet of 10%-15% annual growth.

Current levels, which represent an enterprise value of $3.3BN or over 6x sales and 50x EBITDA, are simply unsustainable and unjustified even in today's Trump fueled bubble market.

There is a hit parade of insider sales across Officer positions, the Board of Directors, Founders and affiliates including recent CFO sales around $84/share and CEO sales from $102-$105/share.

We are initiating coverage of SHAK with a SELL recommendation.  Our fair value target is $75, which represents roughly 4x 2019E revenues and a still pricey 60x+ 2019E EPS for a low double-digit EPS grower.  Further analysis forthcoming.

There is no justification for SHAK to be valued at current levels and clearly insiders and affiliates agree. 

See below for a record of substantial liquidations of stock by insiders and affiliates over the recent past two years. 

We recommend investors follow their lead:

Disclosure: I am/we are short SHAK.

Additional disclosure: We intend to provide additional commentary in our planned coverage of SHAK.