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Why Wingstop Stock Keeps Going Up
Key Points
Wingstop's third-quarter results were better than investors feared.
Management sees a path to more than 10,000 stores.
Shares of Wingstop (NASDAQ:WING) climbed nearly 9% on Monday, furthering their post-earnings announcement ascent.
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Wingstop posted higher-than-expected profits
The restaurant chain reported its third-quarter financial results on Oct. 28.
Revenue rose 5.3% year over year to $185 million, driven by new store openings. Wingstop launched 76 net new stores, bringing its total count to 3,331 locations as of Sept. 26. That includes 2,787 restaurants in the U.S. and 544 franchised locations in international markets.
Yet sales at Wingstop's existing restaurants fell. Domestic same-store sales, which measure revenue generated from locations open for at least a year, declined 5.4%. The company also lowered its full-year same-store sales forecast to a decline of 6.5% to 7%.
Wingstop, like many restaurant chains, is struggling to drive traffic to its stores. With gas prices and other costs rising, many consumers are pulling back on dining out.
Still, Wingstop's adjusted net income came in at $29.3 million, or $1.08 per share. That topped Wall Street's estimates, which had called for per-share profits of $1.02.
A long runway for expansion
CEO Michael Skipworth said the chain's new Club Wingstop loyalty program is helping to entice guests to return to its restaurants more often. Skipworth believes this program, combined with operational investments designed to increase service speed and order accuracy, will help reinvigorate the company's sales growth.
Wingstop, in turn, plans to open as many as 450 net stores in 2026.
Looking further ahead, management sees a far larger opportunity. "Our development pipeline remains robust with over 2,300 committed restaurants globally," Skipworth said during a conference call with analysts.
Skipworth is confident that Wingstop can ultimately grow its global store count to more than 10,000 restaurants, including 1,000 stores in India alone.
Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Wingstop. The Motley Fool has a disclosure policy.