Shake Shack (SHAK) & Bloomin’ Brands (BLMN) Critical Analysis

Shake Shack (NYSE: SHAK) and Bloomin’ Brands (NASDAQ:BLMN) are both small-cap retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, valuation, risk and earnings.

Analyst Ratings

This is a breakdown of current ratings and target prices for Shake Shack and Bloomin’ Brands, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shake Shack 1 6 4 0 2.27
Bloomin’ Brands 1 7 2 0 2.10

Shake Shack currently has a consensus target price of $36.73, suggesting a potential upside of 5.81%. Bloomin’ Brands has a consensus target price of $20.78, suggesting a potential upside of 15.37%. Given Bloomin’ Brands’ higher probable upside, analysts plainly believe Bloomin’ Brands is more favorable than Shake Shack.

Earnings & Valuation

This table compares Shake Shack and Bloomin’ Brands’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Shake Shack $315.90 million 2.85 $49.67 million $0.58 59.84
Bloomin’ Brands $4.19 billion 0.42 $402.41 million $0.90 20.01

Bloomin’ Brands has higher revenue and earnings than Shake Shack. Bloomin’ Brands is trading at a lower price-to-earnings ratio than Shake Shack, indicating that it is currently the more affordable of the two stocks.

Dividends

Bloomin’ Brands pays an annual dividend of $0.32 per share and has a dividend yield of 1.8%. Shake Shack does not pay a dividend. Bloomin’ Brands pays out 35.6% of its earnings in the form of a dividend.

Volatility & Risk

Shake Shack has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500. Comparatively, Bloomin’ Brands has a beta of 0.65, meaning that its share price is 35% less volatile than the S&P 500.

Profitability

This table compares Shake Shack and Bloomin’ Brands’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Shake Shack 4.70% 8.71% 3.29%
Bloomin’ Brands 2.29% 74.68% 5.48%

Insider & Institutional Ownership

82.0% of Shake Shack shares are owned by institutional investors. Comparatively, 99.9% of Bloomin’ Brands shares are owned by institutional investors. 34.9% of Shake Shack shares are owned by insiders. Comparatively, 7.0% of Bloomin’ Brands shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

About Shake Shack

Shake Shack Inc. operates roadside burger stands. The Company serves an American menu of burgers, hot dogs, crispy chicken, frozen custard, crinkle cut fries, shakes, beer and wine, among others. The Company’s signature items are its all-natural, hormone and antibiotic-free burgers, hot dogs, crispy chicken, crinkle cut fries, shakes and frozen custard. Its menu focuses on food and beverages, crafted from a range of classic American foods. The Company’s domestic menu includes a range of signature items, such as the ShackBurger, SmokeShack, Shack-cago Dog, ‘Shroom Burger, seasonal frozen custard, hand-spun shakes, concretes, ShackMeister Ale, and Shack Red and Shack White wines. As of December 28, 2016, it had 114 Shacks in 13 countries and 16 states, as well as the District of Columbia. Its burgers are made with a whole-muscle blend of all-natural, hormone and antibiotic-free Angus beef, ground fresh daily, cooked to order and served on a non-genetically modified organism potato bun.

About Bloomin’ Brands

Bloomin’ Brands, Inc. is a holding company. The Company owns and operates casual, upscale casual and fine dining restaurants. The Company operates through two segments: U.S. and International. The U.S. segment includes all brands operating in the United States. The International segment includes brands operating outside the United States. As of December 25, 2016, the Company had a portfolio of four restaurant concepts: Outback Steakhouse, Carrabba’s Italian Grill, Bonefish Grill, and Fleming’s Prime Steakhouse & Wine Bar. OSI Restaurant Partners, LLC (OSI) is the Company’s primary operating entity. New Private Restaurant Properties, LLC (PRP), an indirect subsidiary of the Company, leases the Company-owned restaurant properties to OSI’s subsidiaries. As of December 25, 2016, the Company owned and operated 1,276 restaurants and franchised 240 restaurants across 48 states, Puerto Rico, Guam and 20 countries.

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