Investors looking for stocks in the Retail - Restaurants sector might want to consider either Yum China Holdings (YUMC) or Shake Shack (SHAK) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earn ...

Upgrades Summary - Melius Research upgraded Wingstop (WING) to Buy from Hold with a price target of $350, increased from $275, citing an attractive entry point after recent stock weakness [2] - Seaport Research upgraded Intel (INTC) to Buy from Neutral with a price target of $65, indicating that new Panther Lakes products are expected to drive near-term improvements and market share recovery in enterprise and consumer products [2] - HSBC also upgraded Intel to Hold from Reduce with a price target of $50, up from $26 [2] - Wolfe Research upgraded Allegiant Travel (ALGT) to Outperform from Peer Perform with a price target of $108, following its acquisition of Sun Country Airlines (SNCY), described as "transformational" [2] - Wells Fargo upgraded Doximity (DOCS) to Overweight from Equal Weight with a price target of $55, down from $65, suggesting that investor concerns are overblown based on survey results indicating sufficient differentiation [2] - Morgan Stanley upgraded Brinker (EAT) to Overweight from Equal Weight with a price target of $200, increased from $160, highlighting attractive long-term growth in fast casual and beverage sectors [2] - Morgan Stanley also upgraded Shake Shack (SHAK) to Overweight from Equal Weight with a price target of $125, up from $115 [2]

Core Insights - Shake Shack has achieved its 19th consecutive quarter of sales growth in Q3, demonstrating resilience in a challenging economic environment where inflation reached 9.2% in mid-2022, while larger competitors like McDonald's experienced a sales decline of 3% [1] - The company reported a restaurant-level profit margin of 22.8%, an increase of 180 basis points, significantly higher than the typical restaurant-level profit margin of 3% to 6% [2] - Shake Shack's same-store sales grew by 4.9% year over year, contrasting with a nationwide decline of 1.1% in fast-food traffic, highlighting its strong market position [5] Company Performance - Shake Shack plans to expand its store count to 1,500 locations, more than tripling its current number, with 30 new stores opened as of Q3 2025 and plans for 55 to 60 new stores in 2026 [6][7] - The company has consistently raised prices over the past 19 quarters, achieving a same-store sales increase of 4.3% in 2024 despite being labeled the most overpriced fast-food chain [8][10] Industry Context - The broader restaurant industry is facing challenges, as evidenced by the performance of the AdvisorShares Restaurant ETF, which gained only 2% over the last 12 months compared to the S&P 500's 18.5% return [3] - Competitors like Chipotle Mexican Grill and Wendy's are struggling, with Chipotle experiencing its first same-store sales decline in 20 years and Wendy's shares down 43% amid a 4.7% slump in same-store sales [4] Valuation Concerns - Shake Shack's price-to-earnings ratio stands at 98, significantly higher than the average S&P 500 company and more than double that of Nvidia, which has a P/E ratio of 45 and is growing earnings by 65% year over year [12] - The overvaluation of Shake Shack raises concerns for potential investors, as even a hypothetical 100% earnings growth would still leave it more expensive than leading stocks in the AI sector [13]

Core Insights - Artificial intelligence (AI) is identified as the greatest investment opportunity of the current era, with a strong emphasis on the urgency to invest now [1][13] - The energy demands of AI technologies are highlighted, with significant implications for global power grids and electricity supply [2][3] Investment Opportunity - A specific company is positioned as a critical player in the AI energy sector, owning essential energy infrastructure assets that will benefit from the increasing energy demands of AI data centers [3][7] - This company is described as a "toll booth" operator in the AI energy boom, profiting from the surge in electricity demand driven by AI advancements [4][5] Market Position - The company is noted for its unique capabilities in executing large-scale engineering, procurement, and construction (EPC) projects across various energy sectors, including nuclear energy [7][8] - It is completely debt-free and has a substantial cash reserve, equating to nearly one-third of its market capitalization, which positions it favorably compared to other energy firms burdened by debt [8][10] Strategic Advantages - The company holds a significant equity stake in another AI-related venture, providing investors with indirect exposure to multiple growth opportunities in the AI sector [9][10] - The stock is described as undervalued, trading at less than 7 times earnings, which presents a compelling investment case given its ties to the burgeoning AI and energy markets [10][11] Future Outlook - The ongoing influx of talent into the AI sector is expected to drive continuous innovation and advancements, reinforcing the long-term growth potential of investments in AI [12] - The convergence of AI, energy infrastructure, and onshoring trends driven by tariffs is seen as a unique opportunity for investors to capitalize on [14][6]

Core Viewpoint - Shake Shack Inc. is recognized as one of the best food stocks to buy in 2026, with positive outlooks from multiple financial institutions despite challenges in the restaurant industry [1]. Group 1: Analyst Ratings - Barclays maintains an Overweight rating on Shake Shack, lowering the price target to $110 from $115, reflecting ongoing sales difficulties in the restaurant sector for 2026 [2]. - Deutsche Bank upgraded Shake Shack from Hold to Buy, setting a price objective of $105, citing a solid growth outlook and favorable restaurant conditions for 2026 [3]. Group 2: Financial Performance - Shake Shack reported a 4.9% year-over-year increase in same-store sales for Q3 2025, attributed to a 1.3% year-over-year increase in customer traffic [4]. - The stock has appreciated by 10.47% year-to-date as of January 9, 2026, indicating positive market performance [4].

Core Insights - Shake Shack Inc. reported preliminary financial results for Q4 and fiscal year 2025, showing resilient performance despite macroeconomic challenges and food inflation, with shares rising 3.7% following the announcement [2][3]. Fiscal 2025 Results - Total revenues for fiscal 2025 reached $1.45 billion, with Q4 revenues at $400.5 million, slightly below the Zacks Consensus Estimate of $407 million [3]. - Same-Shack sales increased by 2.3% for the fiscal year and 2.1% in Q4, supported by positive traffic trends despite adverse weather conditions in the Northeast [4]. - Restaurant-level profit margins remained healthy in the mid-22% range for both the quarter and the full year, attributed to operational improvements and cost controls [5]. - Adjusted EBITDA is projected to be between $208 million and $212 million, with net income expected to be between $50 million and $60 million, indicating balanced growth [5]. Expansion and Demand Drivers - The company opened 45 company-operated Shacks and 40 licensed locations in fiscal 2025, ending the year with 373 company-operated restaurants [6]. - Management highlighted strong demand drivers, including menu innovation, value-focused digital promotions, and increased media investments [6]. Fiscal 2026 Guidance - For fiscal 2026, Shake Shack expects total revenues of $1.6 billion to $1.7 billion, with licensing revenues projected at $59 million to $61 million, aligning with the Zacks Consensus Estimate of $1.65 billion [7]. - Same-Shack sales are anticipated to grow at a low-single-digit rate, while restaurant-level margins are expected to expand to 23% to 23.5% [7]. - The company plans to open 55-60 company-operated Shacks and 40-45 licensed locations in 2026, supported by a robust development pipeline [8]. Long-Term Outlook - Shake Shack reiterated its long-term goals, targeting over 1,500 company-operated Shacks, low-teens revenue and unit growth, and at least 50 basis points of annual margin expansion through fiscal 2027 [9]. - The preliminary results and guidance suggest the company is entering a phase of profitable scale with improving margins and clear visibility into long-term growth [9].

Financial Performance - Total revenue for Q4 2025 was $400.5 million, with FY 2025 revenue reaching $1.45 billion[9] - Same-Shack sales increased by 2.1% in Q4 2025 and 2.3% for FY 2025 compared to 2024[9] - Adjusted EBITDA for FY 2025 is estimated to be between $208 million and $212 million[16] - The company aims for total revenue growth in the low-teens percentage range from FY 2025 to FY 2027[16] Expansion Plans - The company opened 45 new Company-operated Shacks in FY 2025, with 15 openings in Q4 2025[9] - The company plans to open approximately 55-60 new Company-operated Shacks and 40-45 licensed Shacks in FY 2026[16] - The total addressable market has been increased to over 1,500 Company-operated Shacks[4] Profitability Projections - Restaurant-level profit margin is projected to be approximately 22.6% to 22.8% of Shack sales in Q4 2025 and 22.5% to 22.7% for FY 2025[16] Future Guidance - Initial guidance for FY 2026 includes total revenue of $1.6 billion to $1.7 billion and same-Shack sales growth projected to be positive low-single digits[16] Strategic Focus - The company is focused on culinary and marketing innovation to drive top-line growth and improve guest experiences[7]

Financial Data and Key Metrics Changes - The company experienced a slow start in Q1 2024, achieving only positive comp sales, but gained momentum throughout the year, with Q3 showing almost 5% comp sales and over 2% traffic growth [3][4] - The company increased its average build cost from approximately $2.4 million two years ago to just under $2 million in 2024, reflecting a 10% decrease in build costs without compromising quality [5][6] - The company achieved over 100 basis points of restaurant-level margin expansion in 2024, with guidance for an additional 50 basis points in 2025 [22][28] Business Line Data and Key Metrics Changes - The international business grew at a pace consistent with revenue growth in North America, indicating strong performance despite a challenging environment [7] - The company is focusing on menu innovation and premium offerings while also running price point promotions to attract new customers [12][13] Market Data and Key Metrics Changes - The company is investing heavily in targeted digital media to reach potential customers within five miles of each Shack, rather than national advertising [9][10] - Digital sales remained healthy even during adverse weather conditions in December, showcasing the brand's strong demand [10] Company Strategy and Development Direction - The company aims to build a foundation for future growth by improving operations, increasing margins, and enhancing guest experiences [4][5] - The development team is optimizing build costs and exploring smaller footprint formats to penetrate new markets and enhance returns [27][34] Management's Comments on Operating Environment and Future Outlook - Management acknowledged headwinds in 2024 but expressed confidence in the operational improvements and marketing strategies that will drive future growth [3][4] - The company is optimistic about maintaining quality and consistency in its supply chain while mitigating risks associated with single-sourcing ingredients [19][20] Other Important Information - The company is testing new kitchen equipment to improve throughput and maintain quality, with expectations for additional innovations in 2025 [23][25] - Management emphasized that the increase in G&A is primarily due to underinvestment in marketing capabilities, not inefficiencies [29][30] Q&A Session Summary Question: What are the key changes made in labor deployment? - Management highlighted a disciplined approach to labor deployment, achieving over 90% labor attainment compared to 50% previously, which improved guest satisfaction metrics [15][16] Question: How does the company ensure quality in supply chain changes? - Management stated that quality and consistency are top priorities, and they are diversifying suppliers to mitigate risks while maintaining product quality [19][20] Question: What is the outlook for commodity inflation in 2025? - The company forecasts continued elevated pricing on beef but expects some deflation in other input costs, allowing for margin improvements [28]

Financial Data and Key Metrics Changes - The company experienced a slow start in Q1 2025 but gained momentum throughout the year, achieving nearly 5% comparable sales growth in Q3 with over 2% traffic growth [3][4] - Despite challenges in December due to weather, the company still delivered positive comparable sales and traffic in Q4 [4] - The company increased its margins while improving guest and team member experiences, indicating a strong operational foundation for future growth [4][5] Business Line Data and Key Metrics Changes - The average build cost for new locations decreased from approximately $2.4 million two years ago to under $2 million this year, without compromising quality [5][6] - The international business grew at a rate consistent with revenue growth in North America, highlighting effective global partnerships [6] Market Data and Key Metrics Changes - The company is focusing on targeted digital media marketing, which has shown positive results, including a 50% increase in app downloads [10] - Digital sales remained strong even during adverse weather conditions that affected in-shack sales, indicating robust brand demand [10] Company Strategy and Development Direction - The company aims to be competitive in the traffic share game within the industry, focusing on operational excellence and marketing effectiveness [5] - There is a commitment to reducing build costs while maintaining quality, which is expected to enhance cash-on-cash returns [5][6] - The company is exploring new kitchen equipment and processes to improve throughput and maintain quality, with potential innovations expected in late 2026 [24][25] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving additional restaurant-level margin expansion in 2026, driven by supply chain improvements and operational efficiencies [23][29] - The company anticipates continued elevated pricing on beef but expects some deflation in other input costs, allowing for margin improvements [29][30] Other Important Information - The company has successfully improved labor deployment, achieving over 90% labor attainment, which has positively impacted guest satisfaction metrics [16][17] - The company is diversifying its supply chain to mitigate risks associated with single sourcing, which is expected to enhance productivity and reduce costs [20][21] Q&A Session Summary Question: What are the key wins for 2025 and outlook for 2026? - Management highlighted the operational improvements and marketing strategies that have laid a strong foundation for growth moving into 2026 [3][4] Question: How is the company addressing marketing investments? - The company is focusing on targeted digital media and strategic promotions to drive app traffic and sales, with a significant increase in app downloads [10] Question: What changes have been made in labor deployment? - The company has improved labor attainment significantly, leading to better guest satisfaction and operational efficiency [16][17] Question: How is the supply chain being optimized? - Management emphasized the importance of quality and consistency in supply chain decisions, with a focus on diversifying suppliers to enhance competition and reduce costs [20][21] Question: What is the outlook for commodity inflation? - The company expects continued elevated beef prices but anticipates deflation in other input costs, supporting margin expansion [29][30]

Core Viewpoint - Shake Shack experienced lower than expected revenue due to inclement weather affecting sales in its most heavily penetrated markets [1] Company Summary - The company reported that adverse weather conditions had a negative impact on sales during the recent quarter [1]