Wingstop Stock To $182?

Wingstop (WING) stock has fallen 6.8% during the past day, and is currently trading at $259.99. Our multi-factor assessment suggests that it may be time to reduce exposure to WING stock. We are primarily concerned current valuation and a price of $182 may not be out of reach. We believe there is not much to fear in WING stock given its overall Strong operating performance and financial condition. But given its Very High valuation, the stock appears Relatively Expensive.

Below is our assessment:

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Let’s get into details of each of the assessed factors but before that, for quick background: With $7.3 Bil in market cap, Wingstop is a global restaurant chain offering franchised and company-owned locations specializing in wings, with over 1,700 restaurants across 44 U.S. states and 7 countries.

[1] Valuation Looks Very High

This table highlights how WING is valued vs broader market. For more details see: WING Valuation Ratios

[2] Growth Is Strong

• Wingstop has seen its top line grow at an average rate of 28.5% over the last 3 years
• Its revenues have grown 16% from $591 Mil to $683 Mil in the last 12 months
• Also, its quarterly revenues grew 8.6% to $176 Mil in the most recent quarter from $162 Mil a year ago.

This table highlights how WING is growing vs broader market. For more details see: WING Revenue Comparison

[3] Profitability Appears Strong

• WING last 12 month operating income was $180 Mil representing operating margin of 26.3%
• With cash flow margin of 15.2%, it generated nearly $103 Mil in operating cash flow over this period
• For the same period, WING generated nearly $174 Mil in net income, suggesting net margin of about 25.5%

This table highlights how WING profitability vs broader market. For more details see: WING Operating Income Comparison

[4] Financial Stability Looks Very Strong

• WING Debt was $1.3 Bil at the end of the most recent quarter, while its current Market Cap is $7.3 Bil. This implies Debt-to-Equity Ratio of 17.5%
• WING Cash (including cash equivalents) makes up $238 Mil of $721 Mil in total Assets. This yields a Cash-to-Assets Ratio of 33.0%

[5] Downturn Resilience Is Moderate

WING saw an impact slightly better than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.

2022 Inflation Shock

• WING stock fell 62.6% from a high of $184.75 on 16 September 2021 to $69.05 on 24 May 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 3 April 2023
• Since then, the stock increased to a high of $428.85 on 19 June 2024 , and currently trades at $259.99

2020 Covid Pandemic

• WING stock fell 51.1% from a high of $101.63 on 18 February 2020 to $49.72 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
• However, the stock fully recovered to its pre-Crisis peak by 14 April 2020

But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read WING Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.

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