Is Shake Shack, Inc. overvalued or undervalued?

As of 13 February 2025, Shake Shack, Inc. has moved from an attractive to an expensive valuation grade. The company is currently overvalued, with a P/E ratio of 420, significantly higher than the industry average. Other key ratios include a Price to Book Value of 11.65 and an EV to EBITDA of 33.99, both indicating a premium valuation compared to peers.
In comparison, Shake Shack's closest competitor, which has a P/E ratio of approximately 407.22 and an EV to EBITDA of 32.94, suggests that the market is pricing Shake Shack at a higher multiple despite similar operational metrics. The company's return performance has been strong, with a 1-year return of 52.24% compared to the S&P 500's 10.26%, but this does not justify the current valuation levels. Overall, the analysis indicates that Shake Shack is overvalued in the current market environment.