Wingstop’s Best Quarter Ever Was Fueled by 129 New Stores in 90 Days (Watch Your Back, Chick-fil-A)

If you glanced at Wingstop’s stock today and saw that 29% jump (now sitting at 26%), you probably assumed something ridiculous happened… like Rick Ross finally unveiling a lemon pepper-themed OnlyFans, or Steph Curry and LeBron launching a duet collab called “Hot Honey Harmony.” Because let’s face it, when a fast-food chain pops nearly 30% in a day, it usually has something to do with a marketing stunt clearly trying to tempt meme stock traders to pump the stock.

But nope. Not this time. What sent Wingstop flying wasn’t a TikTok trend or a celebrity endorsement (accused of Nazi propaganda by a bunch of cat ladies). It was something far more shocking in today’s market: fundamentals. You’re not dreaming… I’m talking about real earnings, real growth, real numbers. (I know, wild concept.)

Wingstop just posted the most profitable quarter in its public history… and they’ve been on the Nasdaq since 2015. Adjusted EPS came in at $1.00 versus the Street’s 87-cent estimate. That’s a clean 15% beat. Revenue grew 12% YoY to $174.3 million, and total systemwide sales cracked $1.34 billion. These aren’t fluky numbers… this was execution on all cylinders.

(Source: Investing.com)

Now sure, total domestic same-store sales technically dipped 1.9%, but that was still far better than the 3.9% plunge analysts were bracing for. And in a little plot twist the Street didn’t see coming, company-owned stores actually grew same-store sales by 3.6%. Meaning: while franchised locations may have caught a light cold, corporate-owned shops were out here pumping iron and taking names.

And if you’re wondering about costs, Wingstop kept those numbers tight, too. Cost of sales as a percentage of company-owned restaurant revenue actually decreased slightly… from 75.9% last year to 75.2% this quarter. That might sound like a rounding error, but in the restaurant business, it’s a big deal. It means more dollars are sticking to the bottom line. (And fewer dollars are being devoured by rising chicken prices and labor costs.)

But the growth is what really got everyone pushing everyone out of the way to buy up shares. CEO Michael Skipworth proudly bragged that the company opened 129 net new units in Q2 alone. That’s (checks notes) 19.8% growth in locations… marking their fourth straight quarter adding 100+ stores (Chick-fil-A, you might want to watch your back). At this rate, they’re going to end up with more real estate than Starbucks and have shorter wait times (without having to pay $100 million per year for their CEO).

And just when you thought that was enough to get investors licking their fingers, Wingstop piled on even more. They raised their full-year global unit growth forecast to 17%-18%, bumped the quarterly dividend from 27 to 30 cents, and doubled down on guidance that same-store sales will still end the year in the green… despite going up against last year’s monster comps.

And if you're wondering whether there's still room for more upside, management seems to think so. They hinted that things could get even more profitable this fall as the Smart Kitchen rollout gains traction and year-over-year comparisons get easier.  (Though, let’s not forget: expectations will now be much higher. The bar isn’t low anymore… it’s smoking from today’s rally.)

Put it all together, and Wingstop served up a unicorn quarter… one of those rare, everything-clicks kind of moments. Sorta like that one golf round where I somehow hit every fairway, was putting for birdie on every hole, and couldn’t miss if I tried. That’s what this felt like. They crushed earnings, ramped up store growth, tightened their margin (which is tough to do in the restaurant business), and still managed to toss some extra cash back to shareholders.

While there are still questions about the stock’s valuation (it’s trading at nearly 120x trailing earnings)... it assumes they keep growing at this pace indefinitely. And hate to break it to you, they won’t. But right now no one cares… and that pretty much sums up this market.

At the time of publishing this article, Stocks.News holds positions in Starbucks as mentioned in the article.