A focus on opportunistic stocks: Shake Shack Inc. (SHAK), Avalara Inc. (AVLR)

Shake Shack Inc. (NYSE: SHAK) shares are 14.62% up in the year-to-date (YTD) period and have moved 0.04% or $0.03 higher in the latest trading session. However, stock’s trailing 12-month performance remains nearly +127.52% lower. Comparatively, the stock is -12.99% down YTD and 22.78% over the trailing 3-month period. If we look at the shorter duration, its week performance is 13.38% and 38.25% over the month.

Analyst Recommendations

On April 21, 2020, BTIG Research recommended the SHAK stock is a Neutral, while earlier, Wedbush had Upgrade the stock as a Outperform on August 20, 2020. 19 analysts offering the recommendations for the stock have a consensus rating of 2.80 to suggest that the SHAK stock is a “Moderate Buy. 2 of the 19 analysts rate the stock as a “Sell”, while 0 has rated it as “Underweight”. 3 recommend buying, with 0 rating it as an Overweight.

The stock currently trades at $68.28 and analysts tracking its performance over the next 12 months have a consensus estimate price target of $53.46. The forecasts give the Shake Shack Inc. stock a price target range of $77.00 on the higher side while at least one analyst think the stock could plunge to a low of $45.00. The two limits represent an upside potential of 11.32% or -51.73%.

Earnings Forecast

Analysts estimate the earnings to decrease -21.60% in the current quarter to -$0.2, down from the $0.26 reported in the same quarter a year ago. For the current year, earnings should grow to an average of -$0.72, down -13.70% from $0.72 reported last year. Analysts also offered guidance for the next financial quarter, with their average projected EPS at between -$0.3 and $0.04. Wall Street estimates earnings per share to be at an average of $0.1 for the next year.

Insider Transactions Summary

According to SEC data, total insider shares purchases at the company stands at 29 over the last 12 months, while SEC filings reveal that there have been 48 insider sales over the same period. Insiders have purchases 240,265 shares while those sold by company executives and officers stand at 1,432,020. The last 3 months have seen insiders trade a total of 13,259 and 54,689 in purchases and sales respectively.

Meyer Daniel Harris, a Director at the company, sold 1,666 shares worth $91726.0 at $55.06 per share on Aug 14. The Director had earlier sold another 25,000 SHAK shares valued at $1.63 million on Aug 27. The shares were sold at $65.16 per share. Meyer Daniel Harris (Director) sold 23,334 shares at $55.03 per share on Aug 11 for a total of $1.28 million while Meyer Daniel Harris, (Director) sold 25,000 shares on Jul 29 for $1.38 million with each share fetching $55.09.

Avalara Inc. (NYSE:AVLR), on the other hand, is trading around $139.99 with a market cap of $11.59B and analyst research firms have a positive stance on its shares. Analysts predict that the stock will reach $149.67 and spell out a more modest performance – a 6.47% return. Some analysts are even forecasting -$0.17 per share in earnings this year on a short term (1 year) basis.

Let us briefly look at the Avalara Inc. (AVLR) financials, with a focus on its operating details as indicated in its earnings report for the last quarter.

Company balance sheet and cash flow

AVLR’s operating margin was negative on the trailing 12 months basis, remaining steady at -14.30%, while the operating expenses over the recent quarter were at $93.54 million. This represented a 19.7% of the company’s total revenues which amounted $116.49 million. With this in place, we can see that the company’s diluted EPS declined -$0.13 on the year-over-year period, shrinking to -$0.20 as given in the last earnings report.

In terms of the balance sheet & cash flow as of (Sep 2020), the total assets figure advanced to $828.22 million from $805.89 million over the previous quarter. The cash flow from operating activities totaled -$16.09 million, significantly lower than the -$0.42 million reported in the year-ago quarter. The company’s free cash flow for the quarter was -$19.65 million.

Insider activity

Insiders have transacted a total of 143 times at Avalara Inc. over the last 6 months, with insider purchases undertaken 54 times and accounting for 694,468 shares. Insider sales totaled 702,839 shares over the same period, with these deals completed in 89 transactions. Looking at these numbers, we realize that net purchases over that period are -35.0 shares. Insiders now hold a total of 3.91M shares after the latest sales, with -0.10% net shares purchased.

Major holders

Insiders own 2.10% of the company shares, while shares held by institutions stand at 87.60% with a share float percentage of 75.66M. Investors are also buoyed by the number of investors in a company, with Avalara Inc. having a total of 360 institutions that hold shares in the company. The top two institutional holders are Price (T.Rowe) Associates Inc with over 7.78 million shares worth more than $1.04 billion. As of Jun 29, 2020, Price (T.Rowe) Associates Inc held 9.77% of shares outstanding.

The other major institutional holder is Vanguard Group, Inc. (The), with the investment firm holding over 6.82 million shares as of Jun 29, 2020. The firm’s total holdings are worth over $907.57 million and represent 8.57% of shares outstanding.