Wingstop (WING) AI Stock Analysis

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Wingstop

(NASDAQ:WING)

61Neutral

Wingstop's overall stock score reflects strong financial growth and positive earnings call sentiment, countered by high leverage and overvaluation concerns. The stock's bearish technical indicators further limit its attractiveness. While the company's operational efficiency and strategic initiatives are commendable, financial stability and valuation risks should be carefully considered.

Positive Factors

Growth Potential

Wingstop is considered among the best-in-class consumer growth stories, with superior unit economics and consistent share gains.

Operational Efficiency

New AI-enabled kitchen platform being developed cuts ticket times in half, potentially unlocking more sales.

Valuation

The stock is seen as oversold with valuation overly discounting higher unit and EBITDA growth compared to peers.

Negative Factors

Market Conditions

The recent 28% pullback in Wingstop shares is attributed to a sub-Street full-year 2025 comp guide and less certain macroeconomic conditions.

Sales Trends

Lowering our full-year same-store sales estimate to 2.5% from 4.1% driven by a softer consumer environment and more intense promotional cadence among quick-service operators.

Wingstop (WING) vs. S&P 500 (SPY)

Market Cap

$6.87B

Dividend Yield0.42%

Average Volume (3M)964.42K

Price to Earnings (P/E)66.5

Beta (1Y)1.17

Revenue Growth36.03%

EPS Growth57.51%

CountryUS

Employees325

SectorConsumer Cyclical

Sector Strength62

IndustryRestaurants

Share Statistics

EPS (TTM)3.70

Shares Outstanding27,902,887

10 Day Avg. Volume1,210,683

30 Day Avg. Volume964,421

Financial Highlights & Ratios

PEG Ratio1.16

Price to Book (P/B)N/A

Price to Sales (P/S)9.87

Price to Cash Flow (P/CF)199.40

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$314.60

Price Target Upside32.58% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering21

Wingstop Business Overview & Revenue Model

Company DescriptionWingstop Inc., together with its subsidiaries, franchises and operates restaurants under the Wingstop brand name. Its restaurants offer classic wings, boneless wings, and tenders that are cooked-to-order, and hand-sauced-and-tossed in various flavors. As of December 25, 2021, the company had 1,695 franchised restaurants and 36 company-owned restaurants in 44 states and 7 countries worldwide. Wingstop Inc. was founded in 1994 and is headquartered in Addison, Texas.

How the Company Makes MoneyWingstop generates revenue primarily through its franchising model. The company earns money from franchise fees, royalty fees, and advertising fees from its franchisees. Franchisees pay an initial franchise fee to open a location and ongoing royalty fees, which are typically a percentage of their sales. Wingstop also benefits from company-owned restaurant sales, although these make up a smaller portion of the overall revenue compared to franchise operations. Additionally, Wingstop's revenue is augmented by its partnerships with beverage and food suppliers, which can provide incentives and rebates based on sales volumes. The company's strategic expansion into international markets further contributes to its revenue growth, leveraging its brand and operational model to capture new customer bases.

Wingstop Financial Statement Overview

Summary

Wingstop exhibits strong growth in revenue and profitability, with impressive margins indicating operational efficiency. However, the company's negative equity and high leverage pose potential financial risks. Despite these concerns, the robust cash flow generation and growth suggest a well-managed cash flow position, but the financial stability needs close monitoring.

Income Statement

Very Positive

Wingstop has demonstrated strong revenue growth, with a substantial increase from $199.7M in 2019 to $625.8M in 2024. The gross profit margin remained high, reaching 100% in 2024 due to the classification of cost items, while the net profit margin improved significantly to 17.4% in 2024. The EBIT and EBITDA margins also show robust performance, with margins of 26.5% and 30.0%, respectively, indicating strong operational efficiency.

Balance Sheet

Negative

The balance sheet shows a negative stockholders' equity of $675.6M in 2024, indicating financial instability. The debt-to-equity ratio is not calculable due to negative equity, but the high total liabilities suggest significant leverage. The equity ratio is also negative, reflecting a reliance on debt financing, which could pose risks in an economic downturn.

Cash Flow

Positive

Wingstop's cash flow statements reveal a healthy free cash flow growth, with free cash flow increasing from $16.1M in 2019 to $105.7M in 2024. The operating cash flow to net income ratio is approximately 1.45, indicating strong cash generation relative to profits. However, the free cash flow to net income ratio of about 0.97 suggests near-full conversion of profits into free cash flow, highlighting efficient cash management.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
625.81M	460.06M	357.52M	282.50M	248.81M
	Gross Profit
300.87M	222.83M	170.12M	141.10M	130.80M
	EBIT
165.62M	112.59M	91.93M	73.76M	57.39M
	EBITDA
187.97M	125.78M	101.44M	81.83M	51.24M
	Net Income Common Stockholders
108.72M	70.17M	52.95M	42.66M	23.31M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
315.91M	90.22M	184.50M	48.58M	40.86M
	Total Assets
716.25M	377.82M	424.19M	249.20M	211.56M
	Total Debt
59.23M	714.71M	714.15M	469.39M	470.53M
	Net Debt
-256.68M	624.49M	529.65M	420.81M	429.68M
	Total Liabilities
1.39B	835.19M	815.05M	558.73M	552.88M
	Stockholders Equity
-675.59M	-457.37M	-390.86M	-309.52M	-341.31M
Cash Flow		Free Cash Flow
105.68M	80.77M	52.30M	20.86M	59.48M
	Operating Cash Flow
157.61M	121.60M	76.24M	48.88M	65.53M
	Investing Cash Flow
-62.48M	-52.15M	-28.68M	-29.85M	-7.99M
	Financing Cash Flow
144.76M	-155.49M	103.25M	-23.39M	-19.45M

Wingstop Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price237.29

Price Trends

50DMA

245.92

Negative

100DMA

274.83

Negative

200DMA

327.50

Negative

Market Momentum

MACD

-6.26

Negative

RSI

53.24

Neutral

STOCH

78.12

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WING, the sentiment is Neutral. The current price of 237.29 is above the 20-day moving average (MA) of 226.37, below the 50-day MA of 245.92, and below the 200-day MA of 327.50, indicating a neutral trend. The MACD of -6.26 indicates Negative momentum. The RSI at 53.24 is Neutral, neither overbought nor oversold. The STOCH value of 78.12 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for WING.

Wingstop Risk Analysis

Wingstop disclosed 36 risk factors in its most recent earnings report. Wingstop reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Wingstop Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
CAKE	71 Outperform	$2.47B	14.92	41.18%	2.26%	4.13%	56.76%
CAVA	69 Neutral	$10.63B	80.67	20.58%	―	32.25%	873.48%
SHAK	68 Neutral	$3.50B	351.51	2.23%	―	15.18%	-48.78%
WEN	64 Neutral	$2.57B	13.88	68.30%	7.76%	2.98%	-2.58%
WING	61 Neutral	$6.87B	66.55	-16.09%	0.42%	36.03%	57.51%
Sector *	59 Neutral	$11.40B	10.19	-0.83%	4.03%	1.27%	-16.17%
JACK	46 Neutral	$484.47M	―	4.15%	6.85%	-6.02%	-136.86%

* Consumer Cyclical Sector Average

Performance Comparison

WING

Wingstop

237.29

-126.65

-34.80%

JACK

Jack In The Box

24.73

-32.50

-56.79%

CAKE

Cheesecake Factory

46.08

13.47

41.31%

WEN

Wendy's

12.79

-4.74

-27.04%

SHAK

Shake Shack

82.71

-14.50

-14.92%

CAVA

CAVA Group, Inc.

90.07

26.32

41.29%

Wingstop Earnings Call Summary

Earnings Call Date: Feb 19, 2025 | % Change Since: -22.36% | Next Earnings Date: Apr 30, 2025

Earnings Call Sentiment Positive

Wingstop reported strong financial and operational performance in 2024, achieving record growth in sales and restaurant expansion. The introduction of new technology and a focus on digital transformation have positioned the company for future success. While there are challenges related to cost increases and macroeconomic pressures, the overall sentiment is positive due to the significant highlights outweighing the lowlights.

Highlights

Record Year Achievements

Wingstop achieved record top and bottom line results in 2024, with 21 consecutive years of same-store sales growth. Domestic same-store sales grew by 19.9%, and system-wide sales increased by 36.8% to $4.8 billion.

Significant Restaurant Expansion

Opened a record 349 net new restaurants, delivering a 15.8% unit growth. The development pipeline is strong with nearly 2,000 restaurant commitments.

Digital and Technological Advancements

Digital sales mix increased to 70%, and the My Wingstop platform was launched, leading to a 30% growth in the digital database to over 50 million customers.

International Growth

Ended the year with 359 international locations and successfully added the eleventh market in the fourth quarter.

Strong Financial Performance

Adjusted EBITDA increased 44.8% to $212 million for the year, with a fourth-quarter increase of 44% to $56.3 million.

Shareholder Returns

Returned nearly $1 billion of capital to shareholders over the past decade, with a total shareholder return of nearly 2,000%.

Lowlights

Increased Cost of Sales

Overall cost of sales as a percentage of company-owned restaurant sales rose by 250 basis points in Q4 compared to the prior year.

Macroeconomic Pressures

Acknowledged consumer anxiety about the future and macroeconomic uncertainty, particularly in markets like California.

Impact of Wildfires

Noted the impact of wildfires in Southern California, which affected operations and consumer behavior.

Company Guidance

During the Wingstop fiscal fourth quarter and full year 2024 earnings call, key metrics highlighted included a domestic same-store sales growth of 19.9% for the year, driven primarily by transactions, leading to a two-year stacked comp of 38%. The company achieved system-wide sales growth of 36.8% to $4.8 billion and adjusted EBITDA increased by 44.8% to $212 million. Wingstop opened a record 349 net new restaurants, marking a 15.8% unit growth. In the fourth quarter alone, 105 net new restaurants were opened, contributing to a 10.1% same-store sales growth, with a digital sales mix reaching 70%. Looking ahead to 2025, Wingstop anticipates a global unit growth rate of 14% to 15% and provides guidance for low to mid-single-digit same-store sales growth. The company also outlined its strategic focus on scaling brand awareness, menu innovation, and leveraging digital transformation, aiming to grow average unit volumes (AUVs) to $3 million and expand global units to over 10,000 restaurants.

Wingstop Corporate Events

Executive/Board Changes

Wingstop Appoints Thomas R. Greco to Board

Neutral

Dec 18, 2024

Wingstop Inc. has expanded its Board of Directors from nine to ten members, appointing Thomas R. Greco as a new independent Class I director. Greco’s extensive experience, including leadership roles at Advance Auto Parts and PepsiCo, is expected to strengthen Wingstop’s board, potentially impacting its strategic direction and governance.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.