Photo credit: www.investing.com
Wingstop Adjusts Earnings Guidance Amid Stock Volatility
On Monday, Piper Sandler revised its outlook on Wingstop (NASDAQ:) shares, lowering the price target to $300 from a previous estimate of $375, while keeping a Neutral rating on the stock. This adjustment followed the company’s third-quarter 2024 earnings call earlier in the week, which reported a robust 20.9% increase in domestic same-store sales (SSS). While this growth aligned with market consensus, it did not meet the higher expectations of some investors.
The announcement had an immediate impact on Wingstop’s stock, which saw a significant drop of approximately 21% on the day earnings were released. In the following days, the stock struggled to regain lost ground.
An analyst from Piper Sandler noted that, despite recognizing the strength of Wingstop’s brand and its overall business trajectory, the market’s reaction was driven by practical considerations. Analysts from both the buy-side and sell-side have been revising their earnings projections for the fourth quarter of 2024 and the entire year of 2025.
Even with impressive same-store sales growth reported for the third quarter, the company chose to keep its full-year 2024 guidance for same-store sales around 20% instead of increasing it. This decision has seemingly affected investor confidence and contributed to the stock’s decline.
It is important to consider the broader context when analyzing the stock’s performance. The combination of stagnant guidance, revisions to future earnings estimates, and Wingstop’s high valuation multiple has resulted in the recent sell-off of shares.
Piper Sandler’s report indicates a cautious perspective on Wingstop’s stock, illustrating the market’s response to the company’s recent financial performance and revised outlook.
In other news, Wingstop Inc. has reported noteworthy growth in its Q3 earnings and revenues. The company disclosed earnings per share (EPS) of $0.88, marking an impressive 35.4% increase, alongside a significant 38.8% rise in total revenue to $162.5 million.
Furthermore, Wingstop’s domestic same-store sales experienced a growth of 20.9%, with the company maintaining an expectation of approximately 20% growth for the year 2024. Plans are underway to open between 320 and 330 new locations, surpassing prior forecasts.
Citi has also retained a Neutral rating for Wingstop but has cut its price target from $440.00 to $315.00, citing concerns regarding short-term challenges. Similarly, BMO Capital Markets reduced its price target to $335 while maintaining a Market Perform rating. Meanwhile, Stephens has raised its target to $468, keeping its Overweight rating, and BTIG upgraded Wingstop’s stock from Neutral to Buy with a new target of $370.
These developments coincide with Wingstop’s strategic expansion and partnerships designed to boost brand visibility. Notably, the company’s digital sales, which now represent 69% of total sales, have been propelled by its technology platform, MyWingstop.
Average unit volume has surpassed $2.1 million, with a long-term objective of reaching $3 million. The third quarter alone saw the opening of over 100 new restaurants, reflecting the company’s growth strategy.
InvestingPro Insights
Recent insights from InvestingPro provide a deeper understanding of Wingstop’s financial landscape and market trends. Despite the recent downturn in stock prices, Wingstop has demonstrated considerable revenue growth, with a 34.98% increase over the past twelve months leading up to Q3 2024. This aligns with the reported domestic same-store sales growth of 20.9% for the same quarter.
However, the stock’s performance has faced challenges, showing a 19.43% decrease in the past week and a 28.45% drop over the last month. These figures are reflective of the market’s reaction to the earnings call and the company’s decision to hold steady on their guidance.
According to InvestingPro Tips, Wingstop is currently trading at a high earnings multiple, with a P/E ratio of 86.82. This relatively high valuation may shed light on the intensity of the investor response to the unchanged guidance despite the strong quarterly results.
On a brighter note, analysts forecast ongoing sales growth for the current year, which could pave the way for a potential stock recovery. Additionally, Wingstop has maintained its dividend payments consistently for nine years, demonstrating a commitment to returning value to shareholders.
Investors looking for a more detailed analysis may find value in the 13 additional tips offered by InvestingPro, aimed at providing a comprehensive view of Wingstop’s financial health and market positioning.
This article was generated with the support of AI and reviewed by an editor.
Source
www.investing.com