Wingstop Earnings: Firm Can't Stop Beating Street Estimates, but Shares Look Strikingly Expensive

In a quarter when many US competitors have been forced to limp through declining consumer traffic and sluggish comparable store sales growth, narrow-moat Wingstop posted 21.6% transaction-driven comparable store sales growth and 45% growth in adjusted EBITDA, and it raised its full-year guidance for both comp sales and development targets. The firm's $146 million in sales and $0.98 in EPS blew through our $136 million and $0.76 EPS estimates, respectively, and topped FactSet consensus revenue and earnings estimates for the seventh-consecutive quarter. As we digest results, we plan to lift our $139 fair value estimate by a high-single-digit percentage. We advise investors to wait on the sidelines, with Wingstop shares still trading at a 145% premium to our revised valuation.