Shake Shack lifts forecast after sales jump

Shake Shack (NYSE:SHAK) has been given an average recommendation of “Hold” by the nine brokerages that are covering the company, Analyst Ratings Network.com reports. Shake Shack on Monday, August 10, 2015 said that price hikes and the return of its crinkle-cut French fries helped lift sales 12.9 percent at established locations during the second quarter, and raised its outlook for the year. During the quarter we opened three domestic company-operated Shacks as we planted roots in Austin, Texas, continued to expand in Chicago opening our second Shack, located on Michigan Avenue, and strengthened our presence in the New York metro area with our third Shack in New Jersey, at the Village at Bridgewater Commons.

The New York-based company said it had profit of 8 cents per share.

Like all restaurant chains, however, Shake Shack faces pressure from rising minimum wages in the U.S. and rising wage expectations.

Such companies enjoy a so-called “health halo” that diners are willing to pay more for, even though their meals can come with eye-popping calorie counts and significant amounts of saturated fat and sodium.

Shares of Shake Shack (NASDAQ:SHAK) traded down 1.40% on Monday, hitting $70.64.

Last year, the company reported earnings of 3 cents per share on revenue of $27.7 million for the second quarter.

The company, which has just 71 restaurants around the world, raised other key forecasts. But adjusted to factor out one-time items, net income more than tripled, to $3.4 million, from $1.1 million in the same period a year ago. It now projects same-Shack sales to rise in mid- to high-single digits, compared to low- to mid-single digits growth.

The burger chain posted revenue of $48.5 million in the period, also exceeding Street forecasts.

Shares in the company, which went public on January 30 with an IPO offering price of $21, were trading at $76 in extended trading on Monday.