Wingstop rose 8% before the regular stock market opened after adjusted earnings beat estimates, despite missed revenue and weaker U.S. restaurant sales.
Why Wingstop Stock Is Up Premarket
Wingstop Inc. (NASDAQ: WING) is up 8% in premarket trading at $133.71 after its fiscal third-quarter report showed adjusted earnings per share above analyst estimates but revenue below them. The profit beat gave investors a positive result to weigh against continued weakness at established U.S. restaurants. Shares reached $137.51 in premarket.
What Wingstop Inc. Does
Wingstop sells chicken wings and other food through company-run and franchised restaurants. Franchise owners operate under the Wingstop name and pay to use the brand, so the company earns from locations it does not run itself.
Wingstop Third-Quarter Results
Revenue was $185.1 million, up 5.3% from a year earlier, and adjusted earnings per share were $1.08. Adjusted earnings per share is profit per share with certain items excluded, so the result beat analyst estimates even as revenue missed.
Wingstop U.S. Restaurant Sales
Domestic same-store sales, a comparison of U.S. restaurants open long enough to compare with the same period a year earlier, decreased 5.4%. System-wide sales, meaning sales across company and franchised locations, rose 6.0% to $1.4 billion. Growth across all locations can coexist with weaker sales at established U.S. restaurants.
Wingstop Sales Improvement Plan
Management said it is sharpening marketing, strengthening restaurant operations, and using Club Wingstop, its customer loyalty program, to build stronger guest relationships. It also said sales improvement is taking time, so the plan has not yet shown a full turnaround. The company said early signs from these changes are encouraging.
Quick Financial Overview
Wingstop is profitable and is a mid-cap, meaning its stock-market value falls between small and large companies. Its market capitalization, the total value of its shares, is $3.64B.
Wingstop Net Income
Reported net income was $29.1 million, the profit left after costs and taxes. That gives holders a standard profit measure alongside adjusted earnings, which exclude certain items.
Wingstop Stock’s +21.34% Monthly Return
Wingstop Inc. shares have climbed from the $100 level over the past month, but remain down 28% over six months. The recent rebound is still set against a much larger decline, rather than confirming a lasting recovery.
Trading Perspective
The next major chart ceiling is the $300 level, the 52-week high. The the $120 level level marks the bottom of today’s opening gap, the price space between the prior close and today’s open.
Holding above that gap floor would keep the premarket move intact. A drop through it would erase the opening gap.
Wingstop’s Earlier NFL Promotion Rally
We last covered Wingstop Inc. in September, when the stock jumped 7% as NFL promotions kicked off. That earlier rally came before this earnings report and does not show whether the sales trend has turned.
Conclusion
Wingstop’s next quarterly earnings report is the next scheduled test of whether sales are improving, though its date is not provided here. Better sales would support the company’s efforts, while continued weakness would leave those efforts needing proof in the results.
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