Wingstop Earnings: Cheaper Wing Costs, Digital Prowess and Delivery Defend Stratospheric Growth

Narrow-moat Wingstop reported another quarter of strong results, with second-quarter sales of $107 million and diluted EPS of $0.54, comfortably edging our $99 million and $0.48 estimates, respectively. The chain remains on track to deliver another year of stratospheric growth, with management raising its full-year same-store sales estimate to 10%-12% and full-year net unit growth forecast to 240-250 stores, up from high-single-digits and 240, respectively. Underpinning the firm's momentum are ongoing success with its chicken sandwich platform and its delivery aggregator partnerships, with global comparable store sales growth of 16.8% driven almost entirely by increases in traffic. We expect to raise our own full-year estimates into the guided range, driving a mid-single-digit percentage increase to our $107 fair value estimate but leaving shares looking meaningfully overpriced.