Why Shake Shack Stock Gained 33% in August

What happened

Shake Shack (NYSE: SHAK) shares outpaced the market by a wide margin last month as the stock gained 33% compared to a 2% decrease in the S&P 500, according to data provided by S&P Global Market Intelligence.

The rally pushed the "better burger" specialist to more than a 100% return so far in 2019.

A woman takes a bite out of a burger.

Image source: Getty Images.

So what

Investors in consumer goods celebrated news from the company that showed building operating momentum. Shake Shack achieved head-turning sales growth as it added 11 new locations to its relatively small footprint. But the better news was that revenue is in solidly positive territory at existing restaurants, too, which marks an improvement over the 2018 fiscal year.

Now what

CEO Randy Garutti and his team were encouraged enough by the latest growth trends that they lifted their outlook for the year. They now see comparable-store sales rising by a firm 2% rather than the 1% to 2% uptick they had predicted. While that would still trail industry leader McDonald's (NYSE: MCD) by a wide margin, the customer traffic gains are supporting an even faster expansion pace for Shake Shack, which now plans to open around 39 new stores to represent a roughly 50% increase year over year.

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Demitrios Kalogeropoulos owns shares of McDonald's. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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