McDonald's vs Shake Shack Which Is More Lucrative?

McDonald's and Shake Shack are two popular fast-food chains with loyal followings and established reputations in the industry. While McDonald's is a global behemoth with a long history of success and widespread presence, Shake Shack is a newer, smaller player known for its premium burgers and trendy image. Both companies have seen fluctuations in their stock prices over the years, presenting investors with different opportunities and risks. In this analysis, we will compare and contrast the stocks of these two fast-food giants to determine which may be the better investment choice.

McDonald's or Shake Shack?

When comparing McDonald's and Shake Shack, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between McDonald's and Shake Shack.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. McDonald's has a dividend yield of 2.29%, while Shake Shack has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. McDonald's reports a 5-year dividend growth of 8.26% year and a payout ratio of 58.34%. On the other hand, Shake Shack reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with McDonald's P/E ratio at 25.78 and Shake Shack's P/E ratio at 618.69. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. McDonald's P/B ratio is -41.07 while Shake Shack's P/B ratio is 11.83.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, McDonald's has seen a 5-year revenue growth of 0.30%, while Shake Shack's is 0.70%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with McDonald's's ROE at -168.78% and Shake Shack's ROE at 1.93%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $295.10 for McDonald's and $134.60 for Shake Shack. Over the past year, McDonald's's prices ranged from $243.53 to $317.90, with a yearly change of 30.54%. Shake Shack's prices fluctuated between $64.16 and $139.89, with a yearly change of 118.03%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.