Starbucks Corporation (SBUX) and Shake Shack (SHAK) Head to Head Analysis

Starbucks Corporation (NASDAQ: SBUX) and Shake Shack (NYSE:SHAK) are both retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, dividends, earnings, institutional ownership and profitabiliy.

Analyst Ratings

This is a breakdown of recent recommendations for Starbucks Corporation and Shake Shack, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Starbucks Corporation 0 6 22 2 2.87
Shake Shack 1 6 5 0 2.33

Starbucks Corporation presently has a consensus target price of $65.07, indicating a potential upside of 8.20%. Shake Shack has a consensus target price of $37.58, indicating a potential downside of 0.84%. Given Starbucks Corporation’s stronger consensus rating and higher possible upside, equities analysts plainly believe Starbucks Corporation is more favorable than Shake Shack.

Profitability

This table compares Starbucks Corporation and Shake Shack’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Starbucks Corporation 13.47% 51.65% 21.09%
Shake Shack 4.55% 7.15% 2.70%

Dividends

Starbucks Corporation pays an annual dividend of $1.00 per share and has a dividend yield of 1.7%. Shake Shack does not pay a dividend. Starbucks Corporation pays out 49.8% of its earnings in the form of a dividend.

Risk & Volatility

Starbucks Corporation has a beta of 0.76, suggesting that its share price is 24% less volatile than the S&P 500. Comparatively, Shake Shack has a beta of 1.31, suggesting that its share price is 31% more volatile than the S&P 500.

Valuation & Earnings

This table compares Starbucks Corporation and Shake Shack’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Starbucks Corporation $21.98 billion 3.96 $5.01 billion $2.01 29.92
Shake Shack $291.06 million 3.35 $44.91 million $0.53 71.51

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

Institutional & Insider Ownership

71.1% of Starbucks Corporation shares are held by institutional investors. Comparatively, 97.5% of Shake Shack shares are held by institutional investors. 3.4% of Starbucks Corporation shares are held by insiders. Comparatively, 44.7% of Shake Shack shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Starbucks Corporation beats Shake Shack on 12 of the 17 factors compared between the two stocks.

Starbucks Corporation Company Profile

Starbucks Corporation (Starbucks) is a roaster, marketer and retailer of coffee. As of October 2, 2016, the Company operated in 75 countries. The Company operates through four segments: Americas, which is inclusive of the United States, Canada, and Latin America; China/Asia Pacific (CAP); Europe, Middle East, and Africa (EMEA), and Channel Development. The Company’s Americas, CAP, and EMEA segments include both company-operated and licensed stores. Its Channel Development segment includes roasted whole bean and ground coffees, Tazo teas, Starbucks- and Tazo-branded single-serve products, a range of ready-to-drink beverages, such as Frappuccino, Starbucks Doubleshot and Starbucks Refreshers beverages and other branded products sold across the world through channels, such as grocery stores, warehouse clubs, specialty retailers, convenience stores and the United States foodservice accounts.

Shake Shack Company Profile

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.

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