Wingstop Earnings: Shares Still Look Staggeringly Expensive Despite Quarterly Outperformance

Narrow-moat Wingstop posted great fourth-quarter earnings, with $127 million in sales and $0.64 in diluted earnings per share beating our $118 million and $0.57 estimates, respectively. Its franchisees enjoyed striking 21% domestic comparable store sales growth despite traffic declines across the industry and limited price increases, while unit growth accelerated to 13% during the fourth quarter as the firm added a record 255 net units in 2024. Importantly, the chicken restaurant chain goes from momentum to momentum, with 2024 guidance implying another year of high-teens systemwide sales expansion. After digesting results, we plan to raise our $114 fair value estimate by a low-double-digit percentage, still leaving shares trading at a mind-boggling 120% premium. Our assessment of the firm's prospects remains very optimistic, with a 10-year compound annual growth rate of 16%, 18%, and 21% for revenue, operating profit, and diluted EPS, respectively.