Wingstop Rises 8.5% On Strong 1Q Preliminary Sales

Shares of Wingstop were up about 8.5% in early trading on Thursday after the aviation-themed restaurant chain operator reported strong preliminary sales data for the first quarter of fiscal 2021 (ending March 27, 2021). The company is set to report its 1Q results on April 28.

Wingstop’s (WING) domestic same-store sales grew by 20.7% year-over-year. The company-owned restaurant’s same-store sales increased 13.4%, while system-wide sales spiked 30%. Digital sales increased 63.6% in 1Q compared to 43.3% in the prior-year period.

The company opened 41 net new restaurants in 1Q, around 11.7% higher than the year-ago quarter. The company’s CEO Charlie Morrison said, “This is as a result of achieving a key milestone of over $1.5 million AUVs [average unit volumes], translating into best in-class unit economics, and our largest development pipeline to-date.” (See Wingstop stock analysis on TipRanks).

Following the preliminary results, Oppenheimer analyst Michael Tamas said, “WING continues to execute exceptionally well, demonstrated by pre-announced 1Q21 SSS [same-store sales] upside (+20.7% vs. Street’s +14%) and record-breaking unit growth. We believe this highlights the power of WING’s digital platform (~64% mix), best-in-class unit economics and long-term growth profile.”

In a note to investors, the analyst added, “Near-term sales could become more choppy against tougher 2Q comparisons, but this already appears well understood.” The analyst maintained a Hold rating on the stock and awaits “a more accommodating entry-point.”

Overall, the rest of the Street has a cautiously optimistic outlook on the stock, with a Moderate Buy consensus rating based on 8 Buys and 5 Holds. The average analyst price target of $161.73 implies upside potential of about 27.2% to current levels. Shares have gained about 65% in one year.

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