Wingstop makes tasty chicken wings in all flavors and is one of the fastest-growing restaurant chains in the world. It's Tuesday's pick for IBD 50 Stocks To Watch. The growth stock is building a cup-with-handle base with a 189.23 entry.
Wingstop has expanded its footprint globally, yielding impressive top- and bottom-line metrics.
WING, a member of the elite IBD 50 list of growth stocks, has strong technical ratings, with a 95 Composite Rating and 88 Relative Strength Rating. Wingstop sales have grown over the past eight quarters while earnings show robust growth over the past three quarters. This strong performance has earned the restaurant stock a near-perfect 98 EPS Rating.
Wingstop grew Q4 sales a whopping 46% year over year to $104.9 million. At the same time, earnings per share rose 150% year over year to 60 cents.
For the full year, this growth stock saw revenue surge by $75 million to $357.5 million, from $282.5 million the previous year. WING shares hit an all-time high at 193.74 in strong volume after the report.
The company opened many franchises in 2022, lifting royalty fees by $27.9 million. It also pays a quarterly dividend of 19 cents per share, last payable in March.
In 2022, the company earmarked $150 million as it explored options for buying poultry farms to secure chicken wing supply as a way of controlling costs.
Growth Stock Expands Footprint
Wingstop opened in Garland, Texas, in 1994 and started franchising in 1997. It operates both owned and franchised stores.
At the end of 2022, it boasted a network of 1,959 restaurants systemwide. 1,721 restaurants are located in the U.S., including 1,678 franchises and 43 company-owned operations. Wingstop operates 238 franchises outside the U.S.
For the first quarter, FactSet estimates $98.6 million in sales on earnings of 44 cents per share. Wingstop is looking for mid-single-digit same-store sales growth for the next three to five years.
It added 61 new locations in the fourth quarter, bringing the total of new restaurants to 228. The company has plans to add an additional 240 this year. In 2022, Wingstop launched in Spain amid a strong European and Middle Eastern growth plan.
The company plans a total of 7,000 locations, with 3,000 non-U.S. operations across Canada, the U.K., Europe, Mexico, Asia and the Middle East.
The company owns and operates 42 locations, but 98% of Wingstop restaurants are franchised. Analysts polled by FactSet expect revenue from franchise fees to come in at $42.7 million for the March quarter. Sales from owned stores is expected to be half of franchise revenue, at $22 million.
This growth stock ranks second in the retail restaurant group, which holds 44th place among IBD's 197 industry groups.
Significant Fund Ownership
Fund managers hold 78% of outstanding shares. WING has an Accumulation/Distribution rating of B-, which shows considerable institutional interest.
Exchange traded funds hold the stock as well, including the Innovator IBD Breakout Opportunity Fund and the BlackRock Future Innovators ETF.
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