Shake Shack location in Russia. Photo: Shakeshack.com.

Shake Shack (NYSE:SHAK) is growing very slowly in the U.S. by fast-food restaurant standards, aiming to open at least 12 new Shacks in the U.S. per year. The company forecasts an eventual 450 U.S. locations, but at this rate it will take decades to get there. As of July 1, 2015, there were 42 domestic Shacks and 29 international licensed ones.  
 
The company has said from the beginning that it sees international growth as its largest opportunity. Does Shake Shack's international expansion plan justify taking a bite out of this expensive stock?

Why Shacks are so slow to pop up in the U.S.
Even with only about 40 U.S. locations, Shake Shack has still made a splash. Look at Shake Shack's social-media following and you'll see an almost cult-like group of burger and shake fans visiting Shake Shack locations in places like New York, D.C., and now Las Vegas.  

However, even with this much interest, the company is deciding to take its U.S. expansion very slowly, planning to open just 12 stores in 2015, up from the previous estimate of 10. At this rate, it would take 34 more years to reach its 450-store goal.

Why so slow? Founder Danny Meyer and CEO Randy Garutti say this slow growth is intentional so that they can be completely hands-on with new locations and assure each location is given the support it needs to keep quality high, with customer and employee satisfaction the No. 1 goal. 

Consider that Five Guys, a private company with a concept similar to Shake Shack's, has opened over 1,000 locations in less than five years and you can see that Shake Shack's raised guidance to 12 new stores in a year is still very slow relative to its peers. However, the market here is crowded and Shake Shack is deciding its biggest opportunities lie outside of the United States. 

International growth strategy
Shake Shack opened locations in Moscow and London in the second quarter to complement its other locations in Russia (2) and England (1), as well as the Shacks in the Middle East (20) and Turkey (4). The company also announced that it will soon be opening a location in Japan, as well as continuing expansion in the Middle East.  


Waiting outside of the Moscow, Russia, Shake Shack. Photo: Shakeshack.com.

These choices for international expansion are not random. CEO Garutti says that the first priority is to find the right partners to help the company achieve the same level of quality it strives for in the U.S., which is more important right now than targeting specific countries. Right now, all of the international locations are licensed stores, so finding the right partners is crucial to the brand's success. 

Just like in the U.S., Shake Shack's international locations have been met with fanfare. With more partners, it looks like Shake Shack could easily have more international locations than domestic ones, and since the company has said it foresees an eventual 450 domestic locations, there's clearly still a huge growth trajectory for Shake Shack internationally. 

Shake Shack's pricey valuation
Shake Shack's most recent quarter couldn't have been much better. The company grew revenue 75% year over year, with same-Shack sales up over 12%. As the company carefully picks new locations and gives each store the love it needs, it definitely looks like that revenue growth will continue. An eventual 450 stores is already more than 10 times its current domestic locations, and with the potential for international locations to be even more plentiful, Shake Shack continues to look like a great growth story. 

However, that doesn't help the fact that the stock is still incredibly expensive. Average estimates for 2015 year-end earnings is just $0.25 per share, which would bring the P/E to around 176 (as of the Oct. 9 share price of $44).

Is Shake Shake a buy now?
While it's great to see how well Shake Shack's international expansion has worked out so far, it's still incredibly slow for how pricey the stock is. For the stock to get to a reasonable valuation would still take many years at Shake Shack's current growth rate. Eventually it will probably increase how quickly it opens new locations, but starting from such a low base it would take a lot to increase growth enough to make this valuation play out.

As a proponent of long-term investing, I see no problem with looking five, 10, 20 years out for the right opportunity. But this stock still looks like a case of overvalued hype. For now, it might be best to enjoy the burgers and keep an eye on international expansion, but think twice before taking a bite out of this expensive stock. 

Bradley Seth McNew has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.