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Here's Why You Should Retain Wingstop Stock in Your Portfolio Now
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Wingstop Inc. (WING - Free Report) is likely to benefit from comps growth, unit expansion and technological initiatives. The company’s focus on strategic partnerships bodes well. However, elevated costs are a concern.
Growth Catalysts for Wingstop Stock
Wingstop has achieved unparalleled sales growth, with domestic same-store sales increasing by an impressive 20.9% year over year in the third quarter of 2024. This growth has been driven by transaction volume, reflecting strong customer loyalty and demand. The company’s Average Unit Volume has surged to $2.1 million, up from $2 million in the previous quarter and $1.8 million reported in the prior year period.
A key factor behind Wingstop’s success is its exceptional unit economics. The average investment to open a location remains around $500,000, yielding unlevered cash-on-cash returns exceeding 70%. This lucrative model has fueled record demand from franchisees, leading to over 100 new restaurant openings in the third quarter. Building on this momentum, the company expects to open 320 to 330 net new restaurants in the financial year 2024.
Wingstop’s commitment to technological innovation is also a major driver of its success. Earlier this year, the company launched its proprietary tech stack, MyWingstop, which integrates over $2.5 billion in digital sales. This platform provides franchisees with advanced analytics tools and operational capabilities while enhancing the customer experience through AI-driven personalization. Since its launch, Wingstop has reported a 10% improvement in order efficiency, a 35% increase in its first-party database and a 69% digital sales mix, all of which contribute to its strong performance.
Additionally, Wingstop has made significant strides in brand awareness, leveraging high-profile partnerships to elevate its visibility. Recent collaborations with the NFL and NBA, including becoming the official chicken partner of the NBA, have helped the company reach new audiences and achieve record levels of guest acquisition. These targeted media investments have solidified Wingstop’s presence in live sports and streaming platforms, driving customer engagement and fueling growth.
Concerns for WING Stock
Image Source: Zacks Investment Research
In the past three months, Wingstop’s shares have lost 30.1% compared with the industry’s decline of 0.7%. The downside was driven by macroeconomic headwinds.
WING has been grappling with rising costs. Its selling, general and administrative (SG&A) expenses have been rising significantly, increasing by $9.2 million year over year to a total of $32.3 million in the third quarter. The increase was driven by performance-based stock compensation and headcount-related costs to support growth. While these investments are aimed at scaling the business, the higher-than-expected costs could pressure margins, particularly if revenue growth begins to decelerate. The company’s updated SG&A guidance for 2024 now stands between $117.5 million and $118.5 million, up from the previous expectation of $114 to $116 million.
WING’s Zacks Rank & Key Picks
Wingstop currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail-Wholesale sector have been discussed below.
Brinker International, Inc. (EAT - Free Report) presently flaunts a Zacks Rank #1 (Strong Buy). EAT has a trailing four-quarter earnings surprise of 12.1%, on average. The stock has surged 84.1% in the past six months. You can see the complete list of today’s Zacks Rank #1 stocks here.
The consensus estimate for EAT’s fiscal 2025 sales and earnings per share (EPS) indicates growth of 9.3% and 44.2%, respectively, from the year-ago period’s levels.
Sprouts Farmers Market, Inc. (SFM - Free Report) currently sports a Zacks Rank of 1. SFM has a trailing four-quarter earnings surprise of 15.3%, on average. The stock has gained 59.8% in the past six months.
The Zacks Consensus Estimate for SFM’s 2025 sales and EPS indicates a rise of 10% and 14.4%, respectively, from the year-ago period’s levels.
Deckers Outdoor Corporation (DECK - Free Report) currently carries a Zacks Rank #2 (Buy). The stock has gained 25.8% in the past six months.
DECK has a trailing four-quarter earnings surprise of 41.1%, on average. The Zacks Consensus Estimate for DECK’s fiscal 2025 sales and EPS indicates growth of 13.6% and 13%, respectively, from the year-ago period’s levels.
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Here's Why You Should Retain Wingstop Stock in Your Portfolio Now
Wingstop Inc. (WING - Free Report) is likely to benefit from comps growth, unit expansion and technological initiatives. The company’s focus on strategic partnerships bodes well. However, elevated costs are a concern.
Growth Catalysts for Wingstop Stock
Wingstop has achieved unparalleled sales growth, with domestic same-store sales increasing by an impressive 20.9% year over year in the third quarter of 2024. This growth has been driven by transaction volume, reflecting strong customer loyalty and demand. The company’s Average Unit Volume has surged to $2.1 million, up from $2 million in the previous quarter and $1.8 million reported in the prior year period.
A key factor behind Wingstop’s success is its exceptional unit economics. The average investment to open a location remains around $500,000, yielding unlevered cash-on-cash returns exceeding 70%. This lucrative model has fueled record demand from franchisees, leading to over 100 new restaurant openings in the third quarter. Building on this momentum, the company expects to open 320 to 330 net new restaurants in the financial year 2024.
Wingstop’s commitment to technological innovation is also a major driver of its success. Earlier this year, the company launched its proprietary tech stack, MyWingstop, which integrates over $2.5 billion in digital sales. This platform provides franchisees with advanced analytics tools and operational capabilities while enhancing the customer experience through AI-driven personalization. Since its launch, Wingstop has reported a 10% improvement in order efficiency, a 35% increase in its first-party database and a 69% digital sales mix, all of which contribute to its strong performance.
Additionally, Wingstop has made significant strides in brand awareness, leveraging high-profile partnerships to elevate its visibility. Recent collaborations with the NFL and NBA, including becoming the official chicken partner of the NBA, have helped the company reach new audiences and achieve record levels of guest acquisition. These targeted media investments have solidified Wingstop’s presence in live sports and streaming platforms, driving customer engagement and fueling growth.
Concerns for WING Stock
Image Source: Zacks Investment Research
In the past three months, Wingstop’s shares have lost 30.1% compared with the industry’s decline of 0.7%. The downside was driven by macroeconomic headwinds.
WING has been grappling with rising costs. Its selling, general and administrative (SG&A) expenses have been rising significantly, increasing by $9.2 million year over year to a total of $32.3 million in the third quarter. The increase was driven by performance-based stock compensation and headcount-related costs to support growth. While these investments are aimed at scaling the business, the higher-than-expected costs could pressure margins, particularly if revenue growth begins to decelerate. The company’s updated SG&A guidance for 2024 now stands between $117.5 million and $118.5 million, up from the previous expectation of $114 to $116 million.
WING’s Zacks Rank & Key Picks
Wingstop currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Zacks Retail-Wholesale sector have been discussed below.
Brinker International, Inc. (EAT - Free Report) presently flaunts a Zacks Rank #1 (Strong Buy). EAT has a trailing four-quarter earnings surprise of 12.1%, on average. The stock has surged 84.1% in the past six months. You can see the complete list of today’s Zacks Rank #1 stocks here.
The consensus estimate for EAT’s fiscal 2025 sales and earnings per share (EPS) indicates growth of 9.3% and 44.2%, respectively, from the year-ago period’s levels.
Sprouts Farmers Market, Inc. (SFM - Free Report) currently sports a Zacks Rank of 1. SFM has a trailing four-quarter earnings surprise of 15.3%, on average. The stock has gained 59.8% in the past six months.
The Zacks Consensus Estimate for SFM’s 2025 sales and EPS indicates a rise of 10% and 14.4%, respectively, from the year-ago period’s levels.
Deckers Outdoor Corporation (DECK - Free Report) currently carries a Zacks Rank #2 (Buy). The stock has gained 25.8% in the past six months.
DECK has a trailing four-quarter earnings surprise of 41.1%, on average. The Zacks Consensus Estimate for DECK’s fiscal 2025 sales and EPS indicates growth of 13.6% and 13%, respectively, from the year-ago period’s levels.