Fast-food chain Wingstop (NASDAQ:WING) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 17.4% year on year to $171.1 million. Its non-GAAP profit of $0.99 per share was 14.4% above analysts’ consensus estimates.
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Wingstop (WING) Q1 CY2025 Highlights:
- Revenue: $171.1 million vs analyst estimates of $170.8 million (17.4% year-on-year growth, in line)
- Adjusted EPS: $0.99 vs analyst estimates of $0.87 (14.4% beat)
- Adjusted EBITDA: $59.5 million vs analyst estimates of $57 million (34.8% margin, 4.4% beat)
- Operating Margin: 22.4%, down from 29.3% in the same quarter last year
- Locations: 2,689 at quarter end, up from 2,279 in the same quarter last year
- Same-Store Sales were flat year on year (21.6% in the same quarter last year)
- Market Capitalization: $6.43 billion
"Despite the challenging and unpredictable macro-environment, our first quarter results demonstrate the staying power of our strategies and resiliency in our model," said Michael Skipworth, President & Chief Executive Officer.
Company Overview
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.
Sales Growth
A company’s long-term performance is an indicator of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
With $651.1 million in revenue over the past 12 months, Wingstop is a small restaurant chain, which sometimes brings disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale. On the bright side, it can grow faster because it has more white space to build new restaurants.
As you can see below, Wingstop’s sales grew at an incredible 25.9% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts) as it opened new restaurants and increased sales at existing, established dining locations.
This quarter, Wingstop’s year-on-year revenue growth was 17.4%, and its $171.1 million of revenue was in line with Wall Street’s estimates.
Looking ahead, sell-side analysts expect revenue to grow 16.8% over the next 12 months, a deceleration versus the last six years. Still, this projection is admirable and indicates the market is baking in success for its menu offerings.
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Restaurant Performance
Number of Restaurants
The number of dining locations a restaurant chain operates is a critical driver of how quickly company-level sales can grow.
Wingstop sported 2,689 locations in the latest quarter. Over the last two years, it has opened new restaurants at a rapid clip by averaging 14.2% annual growth, among the fastest in the restaurant sector. This gives it a chance to scale into a mid-sized business over time. Additionally, one dynamic making expansion more seamless is the company’s franchise model, where franchisees are primarily responsible for opening new restaurants while Wingstop provides support.
When a chain opens new restaurants, it usually means it’s investing for growth because there’s healthy demand for its meals and there are markets where its concepts have few or no locations.
Same-Store Sales
A company's restaurant base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales gives us insight into this topic because it measures organic growth at restaurants open for at least a year.
Wingstop has been one of the most successful restaurant chains over the last two years thanks to skyrocketing demand within its existing dining locations. On average, the company has posted exceptional year-on-year same-store sales growth of 16.9%. This performance along with its meaningful buildout of new restaurants suggest it’s playing some aggressive offense.
In the latest quarter, Wingstop’s year on year same-store sales were flat. This was a meaningful deceleration from its historical levels. We’ll be watching closely to see if Wingstop can reaccelerate growth.
Key Takeaways from Wingstop’s Q1 Results
We enjoyed seeing Wingstop beat analysts’ EPS and EBITDA expectations this quarter. On the other hand, its flat same-store sales slightly missed. Overall, this quarter had some key positives, but the market seemed to focus on the same-store sales growth. The stock traded down 2.8% to $224.00 immediately following the results.
So should you invest in Wingstop right now? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here, it’s free.