Wingstop: Initiating Coverage With $98 Fair Value and Narrow Moat; Shares Overpriced

We're initiating coverage of Wingstop with a narrow moat rating and fair value estimate of $98 per share, leaving shares trading at a nearly 90% premium to our intrinsic valuation. While the firm boasts an extraordinary growth runway, with our forecasts already suggesting that it achieves $10 billion in systemwide sales and 5,000 total units in a decade (up from $2.7 billion and nearly 2,000 currently), we don’t surmise its prospects justify such a lofty multiple (93 times forward earnings). Our narrow moat rating is attributable to Wingstop’s brand intangible assets, underpinned by best-in-class unit economics and robust comparable store sales growth.