Stock Story -
Fast-food chain Wingstop (NASDAQ:WING) announced better-than-expected results in Q2 CY2024, with revenue up 45.3% year on year to $155.7 million. It made a GAAP profit of $0.93 per share, improving from its profit of $0.54 per share in the same quarter last year.
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Wingstop (WING) Q2 CY2024 Highlights:
- Revenue: $155.7 million vs analyst estimates of $145.1 million (7.3% beat)
- EPS: $0.93 vs analyst estimates of $0.83 (12.4% beat)
- Gross Margin (GAAP): 47.8%, in line with the same quarter last year
- Locations: 2,352 at quarter end, up from 2,046 in the same quarter last year
- Same-Store Sales rose 28.7% year on year (16.8% in the same quarter last year)
- Market Capitalization: $11.06 billion
The passion project of two chicken wing aficionados in Texas, Wingstop (NASDAQ:WING) is a popular fast-food chain known for its flavorful and crispy chicken wings offered in a variety of sauces and seasonings.
Modern Fast FoodModern fast food is a relatively newer category representing a middle ground between traditional fast food and sit-down restaurants. These establishments feature an expanded menu selection priced above traditional fast food options, often incorporating fresher and cleaner ingredients to serve customers prioritizing quality. These eateries are capitalizing on the perception that your drive-through burger and fries joint is detrimental to your health because of inferior ingredients.
Sales GrowthWingstop is a small restaurant chain, which sometimes brings disadvantages compared to larger competitors benefitting from better brand awareness and economies of scale. On the other hand, one advantage is that its growth rates can be higher because it's growing off a small base.
As you can see below, the company's annualized revenue growth rate of 25.5% over the last five years was incredible as it added more dining locations and increased sales at existing, established restaurants.
This quarter, Wingstop reported magnificent year-on-year revenue growth of 45.3%, and its $155.7 million in revenue beat Wall Street's estimates by 7.3%. Looking ahead, Wall Street expects sales to grow 18.8% over the next 12 months, a deceleration from this quarter.
Same-Store Sales Wingstop has been one of the most successful restaurants over the last two years thanks to skyrocketing demand within its existing locations. On average, the company has posted exceptional year-on-year same-store sales growth of 17.4%. This performance suggests its rapid buildout of new restaurants is justified. When a chain has strong demand, more locations should help it reach more customers seeking its meals and boost revenue growth.
In the latest quarter, Wingstop's same-store sales rose 28.7% year on year. This growth was an acceleration from the 16.8% year-on-year increase it posted 12 months ago, which is always an encouraging sign.
Key Takeaways from Wingstop's Q2 Results We were impressed by how significantly Wingstop blew past analysts' gross margin expectations this quarter. We were also excited its revenue and EPS outperformed Wall Street's estimates. Zooming out, we think this was an impressive quarter that should delight shareholders. The stock traded up 4.1% to $393 immediately following the results.
