Tag Archives: S

Shake Shack Sizzled; Wall Street Expects T-Mobile/Sprint Deal to Fizzle

In this segment of the Motley Fool Money podcast, host Chris Hill is joined by Fool analysts Jason Moser, Andy Cross, and Ron Gross to consider the progress of Shake Shack(NYSE:SHAK), which is making headway in its multiyear expansion plan. First-quarter revenue was up 29%, and more importantly, same-Shack sales were up 1.7%, and share prices shot upward in response. Even so, at least one Fool says the stock is still not for him.

In other news, after a week, shares of T-Mobile(NASDAQ:TMUS)and Sprint(NYSE:S) are lower than they were before they announced a merger deal. The Fools discuss the likelihood of the plan making it past regulators and shareholders to closing, and consider whether it would be a win or a loss for customers.

A full transcript follows the video.

This video was recorded on May 4, 2018.

Chris Hill: Let’s move on to Shake Shack. First quarter profits came in higher than expected. The burger chain also raised guidance for the full fiscal year, and the stock was up 23% on Friday, Ron.

Ron Gross: Oof, man, I don’t know. You know, I still don’t get the valuation here, but you can’t argue with solid results. Revenue up 29%, beating estimates. Get this: same-shack sales, not same-store sales, same-shack sales were up 1.7%. You have adjusted pro forma net income, after you adjust for some wonky things, up 54%. Amazing. Guidance was good. They’re building toward 200 domestic company-operated shacks by the end of 2020. Their long-term target is 450. They’re at about 100 now. So, theoretically, the growth rate is there to support this valuation, which is in excess of 25X EBITDA. It’s not an investment for me. I’ve actually never been in one, but they’re building one around the corner from my house, so stay tuned. [laughs] So, great results, stock is not for me.

Hill: You know what? If Zillow can have the Zestimate, they can have same-shack sales. This past week kicked off with merger Monday living up to its name. T-Mobile announced it’s buying Sprint for $26 billion in stock. This is the third time the two companies have attempted to get together. Jason, both stocks down this week. Wall Street does not think this deal is going through.

Jason Moser: Well, Chris, I’m going to bet against Wall Street. I think the third time is a charm here. I think this deal absolutely gets approved. To me, to say that competition would actually be harmed because technically, you’re going from four big providers to three, I think that misses the point entirely. We’re essentially operating in what’s a duopoly at this point with AT&T and Verizon. And honestly, going around the table here really quick, name the AT&T CEO or name Verizon’s CEO.

Hill: I can’t.

Moser: I know I can’t do it. John Legere, to me, is a big part of this deal. I think, if you have a combined entity with him at the helm, he’s extremely customer-centric, somewhat eccentric, loves slow cooker Sundays. But, I do think this deal happens, and I think ultimately, customers and consumers will benefit from it.

Hill: Just from an entertainment standpoint, I would love for him to continue being CEO of this company.

Mid-Morning Market Update: Markets Mixed; Phillips 66 Earnings Beat Views

Following the market opening Friday, the Dow traded down 0.17 percent to 24,281.00 while the NASDAQ climbed 0.28 percent to 7,138.68. The S&P also rose, gaining 0.08 percent to 2,669.07.

Leading and Lagging Sectors

Friday morning, the telecommunication services shares gained 1.59 percent. Meanwhile, top gainers in the sector included Sprint Corporation (NYSE: S), up 8 percent, and SK Telecom Co., Ltd. (NYSE: SKM), up 3 percent.

In trading on Friday, energy shares tumbled 1.11 percent.

Top Headline

Phillips 66 (NYSE: PSX) reported better-than-expected earnings for its first quarter on Friday.

The company reported Q1 EPS of $1.04 vs. $0.89 estimates and revenue of 24.05 billion vs. $29.46 billion estimates.

Equities Trading UP

DMC Global Inc. (NASDAQ: BOOM) shares shot up 25 percent to $39.55 after the company reported upbeat Q1 results and issued upbeat Q2 guidance.

Shares of Knowles Corporation (NYSE: KN) got a boost, shooting up 15 percent to $12.83 as the company reported Q1 results.

SVB Financial Group (NASDAQ: SIVB) shares were also up, gaining 19 percent to $305.90 following strong quarterly results.

Equities Trading DOWN

Charter Communications, Inc. (NASDAQ: CHTR) shares dropped 8 percent to $273.94 as the company posted Q1 results.

Shares of Data I/O Corporation (NASDAQ: DAIO) were down 16 percent to $6.12 following Q1 results.

Flex Ltd. (NASDAQ: FLEX) was down, falling around 15 percent to $14.20 after a mixed fourth quarter report.

Commodities

In commodity news, oil traded down 0.38 percent to $67.93 while gold traded up 0.20 percent to $1,320.50.

Silver traded down 0.10 percent Friday to $16.55, while copper fell 2.26 percent to $3.067.

Eurozone

European shares were mostly higher today. The eurozone’s STOXX 600 gained 0.12 percent, the Spanish Ibex Index rose 0.06 percent, while Italy’s FTSE MIB Index fell 0.77 percent. Meanwhile the German DAX rose 0.80 percent, and the French CAC 40 climbed 0.26 percent while U.K. shares rose 0.82 percent.

Economics

The U.S. expanded at an annual pace of 2.3 percent in the first quarter. However, economists were expecting a 2 percent growth.

U.S. employment cost index rose 0.8 percent in the first quarter.

The University of Michigan's consumer confidence index rose to 98.80 in April, versus prior reading of 97.80. Economists expected a reading of 98.00.

The Baker Hughes North American rig count report for the latest week will be released at 1:00 p.m. ET.

Data on farm prices for the recent week will be released at 3:00 p.m. ET.