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.