Since it went public in 2015, Wingstop (WING -13.29%) has been one of the greatest restaurant stock investments. This means it trades at 52-week highs more often than 52-week lows. But after reporting financial results for the fourth quarter of 2024, Wingstop stock finds itself at 52-week lows, having plunged by 12% as of 11 a.m. ET on Wednesday.
In 2024, Wingstop's same-store sales (comps) increased for a 21st consecutive year -- if there's a better streak out there, I'm not personally aware of it. Fourth-quarter domestic comps were up 10% year over year, which is usually a great number. But investors were let down because they had expected a higher number.
Wingstop experienced growth across the board in 2024. The company opened 349 net new restaurants, boosting its total by nearly 16%. Its revenue was up 36% to $626 million. And its net income was up 55% to $109 million. These are all great growth rates and demonstrate the company's strengths and rising popularity.
However, the stock was trading at over 20 times sales last year, an extreme price for a restaurant stock even when accounting for its fast growth and high-margin franchise model. In short, it seems that shares were due for a cooldown. And with fourth quarter comps coming in slightly below expectations, that's all the convincing that investors needed to abandon the stock.
For long-term shareholders, Wingstop shares are still up 75% over the last three years, which is a great return. And for those sitting on the sideline (like myself), this pullback is a great time to circle back and consider the stock.
Wingstop's 21 straight years of comps gains offer the clearest proof that this is a special company. And over the long term, management intends to open thousands of new locations, which should boost shareholder value. In conclusion, it may be trading at 52-week lows today, but the long-term trend should be higher.
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