Let’s Take a Quick Look at the New Hot Stock Wingstop

Stock (Symbol)

Wingstop (WING)

Stock Price


Food & Necessities
Data is as of
November 10, 2016
Expected to Report
Mar 1 – 6
Company Description
wingstopWingstop Inc. is a franchisor and operator of restaurants that specialize in cooked-to-order, hand-sauced and tossed chicken wings. The Company offers its guests with over 11 flavors on bone-in and boneless chicken wings paired with hand-cut, seasoned fries and sides. It is a casual chicken wings-focused restaurant chain with various concepts, which include wings as add-on menu items or focus on wings in a bar or sports-centric setting. The flavors include Atomic, Mango Habanero, Cajun, Louisiana Rub, Mild, Hickory Smoked BBQ, Lemon Pepper, Garlic Parmesan, Hawaiian and Teriyaki. It offers various order options, including eat-in, to go, individual, combo meals and family packs. It operates through two segments: Franchise and Company. The Franchise segment consists of its domestic and international franchise restaurants, which represent the majority of its system-wide restaurants. The Company segment consists of company-owned restaurants, which are located only in the US. Source: Thomson Financial
Sharek’s Take
David SharekWingstop (WING) is a new “hot stock” but even though I’m from Buffalo this stock is too hot for my taste. Last qtr WING grew profits 18% on a 14% gain in sales, including a 3% gain in same store sales. These numbers are good, but not great considering the stock is saddled with a P/E of 42. WING has an Estimated Long Term Growth Rate of 21% per year, but more importantly has great growth opportunity to canvas the U.S. with its franchises. The problem is the company isn’t growing all that rapidly, and that valuation is high. My Fair Value is 25x earnings which works out to $16 a share in 2017. That’s a long way down from here. I’m just doing a quick first glance on this stock with it being so high right now, and will not pick up coverage of it — for a while anyway. But WING has been in the news lately and I wanted to pass along my thoughts. The stock is just too damn hot for me. 
One Year Chart
wing_2016_q4Although WING is up good in this one-year chart, the stock opened at $31 in June 2015 after it had its IPO. I’m not mentioning the IPO price cuz us little guys wouldn’t be able to pick shares up before the open. So in a nutshell this stock hasn’t moved since it went public, and I think we will see more of the same going forward. Profit Estimates for the next 4 qtrs are 8%, 6%, 7% and 23%. So its got a high P/E and low profit growth. That’s really not good. We can’t assume WING will beat the street by a wide margin either, as it beat by just a penny the last 2 qtrs.
Fair Value
wing_2016_q4_phMy Fair Value is 25x earnings, but we could go up to 30x in the future. But not today with those qtrly estimates staring at us. Gosh, look at that 2018 Fair Value — $20? But I think by then we might be giving WING a 30 P/E which would take the Fair Value to $24. Still below the current price.
Bottom Line
wing_2016_q4_10yrWingstop has great growth opportunity, but on a P/E basis the stock is just too hot for me to handle. The company also sells for 9x sales whereas its competitor Buffalo Wild Wings sells for 1x sales. I like Wingstop and love chicken wings in general, especially suicide hot ones. But even this stock is too hot for me to swallow. 
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