What Happened?

Shares of fast-food chain Wingstop (NASDAQ:WING) fell 13.9% in the afternoon session after the company reported underwhelming fourth-quarter earnings: its same-store sales, revenue, and full-year revenue guidance fell short of Wall Street's estimates. Domestic same-store sales, which drive the bulk of revenues, grew 10.1%, a sharp deceleration from 21.2% growth in the prior year. On the other hand, Wingstop blew past analysts' EPS and EBITDA expectations, but management guided for low-to-mid single-digit same-store sales growth in 2025. This signals a continued slowdown in top-line momentum. Overall, this was a softer quarter.

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What The Market Is Telling Us

Wingstop’s shares are not very volatile and have only had 9 moves greater than 5% over the last year. Moves this big are rare for Wingstop and indicate this news significantly impacted the market’s perception of the business. 

The biggest move we wrote about over the last year was 4 months ago when the stock dropped 20.5% on the news that the company reported third-quarter earnings: Its EPS missed, and its full-year same-store sales guidance of 20% fell slightly short of Wall Street's projections. 

On the other hand, revenue and EBITDA exceeded expectations. Overall, this was a weaker quarter, and with the stock trading north of 80x P/E, the stock was priced for perfection (the market was likely pricing in a "beat and raise" quarter).

Wingstop is down 11.1% since the beginning of the year, and at $259.63 per share, it is trading 39.5% below its 52-week high of $428.85 from June 2024. Investors who bought $1,000 worth of Wingstop’s shares 5 years ago would now be looking at an investment worth $2,629.

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