What happened

Shares of Shake Shack (NYSE:SHAK) reached all-time highs of $113 per share on Wednesday. Wall Street was relieved by the company's recent business update and thrilled for the future following its presentation at the ICR Conference. Because of this, analysts are raising their outlooks for Shake Shack stock, causing it to soar as much as 11% higher today.

So what

Yesterday, Shake Shack provided investors with preliminary results for the fourth quarter of 2020. Same-store sales in Q4 (which the company affectionately calls "same-Shack sales") were down 17.4%. Normally that would be seen as a devastating quarter. However, it was a marked improvement from the 31.7% decline it reported in the third quarter. Remember, a large percentage of its restaurants are in New York City and other metropolitan areas -- places that still have severe dining restrictions due to the COVID-19 pandemic.

A businesswoman draws an upward arrow over a bar chart displayed on a transparent touchscreen.

Image source: Getty Images.

Wall Street appears to be relieved that Shake Shack's sales continue to recover. And for Q4, revenue was actually up 4% even though same-store sales were down. This is because the company opened 13 new locations during the quarter and 36 for the year. That's great, but the upcoming batch of new restaurants is what's truly exciting analysts.

Now what

Shake Shack presented at the ICR Conference yesterday and gave some updates on its new restaurant development pipeline. Between now and the end of 2022, the company plans to open 80 to 90 new company-owned locations. Furthermore, it intends to open 35 to 45 new licensed locations. For perspective, Shake Shack ended Q4 with just 183 company-owned and 128 licensed locations.

SHAK Chart

Shake Shack stock is now beating the S&P 500 since its initial public offering. SHAK data by YCharts

Shake Shack expects to regain some operating leverage as sales rebound from the coronavirus pandemic, although it admits that ongoing delivery fees will eat into its bottom line. But analysts didn't seem to care. Multiple firms raised their outlooks for Shake Shack stock, which is a big part of why it was up today.

Considering Shake Shack has $183.8 million in cash right now (the most it's ever had), the company is certainly well funded to pursue growth. But I think shareholders should tap the brakes on their excitement just a tad. The stock is at all-time highs, but the company doesn't have all-time high profits. Personally, I'll be watching how Shake Shack maneuvers in coming quarters to reign in expenses.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.