The Steak n Shake (SNS) recently hit a new 52-week high on a return to profitability in its Q1 results from late January and surging estimates.
Company Description
The Steak n Shake Company, together with its subsidiaries, owns 412 restaurants and franchises another 73 21 states in the United States. The company was founded in 1934 and has a market cap of $550 million.
First-Quarter Results
Stake n Shake showed a return to profitability in its Q1 results from January 29, pushing its share price higher and creating optimism as the company focuses on operational efficiencies and concentrated growth to drive its earnings. Sales were up 13% from last year to $148 million. Same store sales were up 14.4% as customer traffic increased 23% from last year. Earnings also came in strong at $3.67, blowing past the Zacks Consensus Estimate of 93 cents.
Impressively, Steak n Shake gained in a number of key categories, enabling the burger chain to compliment its solid top-line growth with operational efficiencies. Cost of goods sold dropped 80 basis points to 26.1& of revenue. Operating costs dropped to 49.6% of sales from 54.8%, while general and administrative costs fell to 5.9% from 6.6% of revenue.
Estimates Up
The upward momentum has caused analysts to raise estimates, with the current year adding $5.43 to $15.82. The next-year estimate is pegged at $18.33, a 16% growth projection.
In light of the recent run higher, shares of SNS are trading at a premium to the overall market with a forward P/E of 24X.
The Chart
SNS recently hit a new 52-week high $396.90, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service. Zacks Investment Research
