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Wingstop (WING) Earnings Preview

by | Jul 24, 2021

Wingstop (WING) reporting earnings on 7-28 before the open with the Street looking for $0.33 on $73.13M in sales. Next quarter is guided to $0.32/$72.33M while the FY is $1.43/$290.07M. Shares have closed higher four of the last five with an average closing move of 5.75% and a max move of 16.72%. The current implied move is 7.5%. Shares have traded well in 2021, up 28%, and near a big monthly flag breakout above $173. The move higher targets $235 and continuation of the bull trend for one of the best QSR names. The $5B company trades 92.75X earnings, 19X sales, and 125X cash with a small yield. QSR has been a hot spot for earnings so far this quarter including blowout results from Chipotle and the space should continue to see strong results. WING has been posting strong results despite rising chicken prices and labor costs and they expect both of those headwinds to continue into the 2H. They continue to see strong demand while digital has grown to more than 60% of their overall mix with best-in-class customer retention numbers. WING has big long-term initiatives to focus on including globalization of their brand, modernizing their digital platform, and investing in customer experience. Analysts have an average target for shares of $166 and a Street High of $182. Stifel positive on 7/19 expecting the company to post positive SSS for Q2 despite difficult comps. Stephens positive on 6/21 on their ‘ThighStop’ vertical calling it an interesting development and an incremental demand driver that helps temper costs in the near-term. The firm sees long-term opportunity in thighs. BTIG upgrading to Buy in June citing a series of calls with franchisees which give the analyst confidence that the company’s domestic development is accelerating in spite of the record-high wing prices and labor shortages. Wingstop’s same-store sales will moderate over the coming quarters, but the brand is retaining much of the average weekly sales gains achieved during the pandemic. Short interest is 6.75% and near multi-year lows. Hedge fund ownership rose 4%.

 

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