Critical Comparison: Shake Shack (NYSE:SHAK) vs. Wingstop (NASDAQ:WING)

Wingstop (NASDAQ:WING) and Shake Shack (NYSE:SHAK) are both mid-cap consumer discretionary companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.

Volatility and Risk

Wingstop has a beta of 1.81, indicating that its share price is 81% more volatile than the S&P 500. Comparatively, Shake Shack has a beta of 1.63, indicating that its share price is 63% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Wingstop	16.15%	-16.31%	18.05%
Shake Shack	2.76%	9.62%	2.81%

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Wingstop	1	6	22	1	2.77
Shake Shack	2	10	15	0	2.48

Wingstop currently has a consensus price target of $241.81, indicating a potential upside of 85.46%. Shake Shack has a consensus price target of $88.04, indicating a potential upside of 35.93%. Given Wingstop’s stronger consensus rating and higher probable upside, equities analysts plainly believe Wingstop is more favorable than Shake Shack.

Institutional and Insider Ownership

86.1% of Shake Shack shares are held by institutional investors. 0.5% of Wingstop shares are held by insiders. Comparatively, 8.3% of Shake Shack shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Wingstop and Shake Shack”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Wingstop	$696.85 million	5.10	$174.27 million	$4.21	30.97
Shake Shack	$1.45 billion	1.92	$45.72 million	$0.98	66.09

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

Summary

Wingstop beats Shake Shack on 10 of the 15 factors compared between the two stocks.

About Wingstop

Wingstop Inc., together with its subsidiaries, franchises and operates restaurants under the Wingstop brand. Its restaurants offer classic wings, boneless wings, tenders, and hand-sauced-and-tossed in various flavors, as well as chicken sandwiches with fries and hand-cut carrots and celery that are cooked-to-order. The company was founded in 1994 and is headquartered in Addison, Texas.

About Shake Shack

Shake Shack Inc. owns, operates, and licenses Shake Shack restaurants (Shacks) in the United States and internationally. Its Shacks offers hamburgers, chicken, hot dogs, crinkle cut fries, shakes, frozen custard, beer, wine, and other products. The company was founded in 2001 and is headquartered in New York, New York.