SHAK
Shake Shack Inc.
$59.23
Platform & Compounding FCF
85%
Two-stage FCF DCF
Moderate
·
Conviction
Undervalued
Trading 33.4% below fair value
You pay
$59.23
Bear
$39.40
Fair
$88.99
Bull
$154.60
Bear
$39.40
-33.5%
14% stage 1 growth, 12% discount
Fair
$88.99
+50.3%
23% stage 1 growth, 12% discount
Bull
$154.60
+161.0%
29% stage 1 growth, 12% discount
Key Value Driver
FCF growth rate (23% base case)
Terminal Value % of EV
44%
Implied Market Multiple
33.3x
Market is pricing in (growth)
17.8%
vs 22.6% base
Summary
Our base-case estimate uses a two-stage discounted cash flow model based on free cash flow. We then blend that result with the average analyst price target of $87.44 from 37 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $88.99 per share.
Warnings
Stock-based employee pay equals 43% of profits. This dilutes existing shareholders, so cash flow alone overstates what owners really earn.
Key Risks
- P/E alone misleads — earnings depressed by growth investment
- Cyclical or commodity businesses may be misclassified as platforms
- Terminal value dominance suggests sensitivity to long-run assumptions