Wingstop is Monday's pick for IBD 50 Growth Stocks To Watch as the restaurant stock is climbing up the right side of a cup base. Wingstop stock retook an important level Friday on its way back to highs.
The restaurant chain offers chicken wings and chicken sandwiches in 11 flavors. It operated over 2,300 global locations at the end of June. Wingstop stock holds the No. 3 spot out of 54 stocks in the retail restaurants industry group, which ranks No. 120 out of the 197 IBD groups.
Wingstop Stock Building Base
The restaurant stock is testing resistance around the 400 level. Shares are building the right side of a stage two cup base with a 431.03 buy point, according to MarketSurge pattern recognition. The entry point is also its all-time high reached on June 28.
The chicken wing chain's shares overtook the 50-day moving average Friday after spending most of the base developing under the line. The stock is recovering from a sell-off in restaurant stocks in early July. Wingstop shares have climbed 57% so far this year.
Profit Growth Robust But Looks To Temper
Wingstop topped second-quarter earnings and sales estimates on July 31. It raised its 2024 guidance to around 20% domestic same-store sales growth from its previous forecast of low double-digits. Wingstop also increased its 2024 global net new stores forecast to 285-to-300 from 275-to-295.
Second-quarter profit grew 63% following gains of 7% and 66% in the previous two quarters. Quarterly sales growth accelerated to 45% from 21% and 34%.
Analysts' consensus earnings estimates are for a 36% rise in the current quarter, then 42% and 15% increases in the following two periods. Revenue growth is expected to climb 36%, 29% and 19% over the next three quarters.
FactSet earnings projections were recently revised upward to a 51% increase for the full year then 22% in 2025.
Wingstop stock holds a highest-possible 99 IBD Earnings Per Share Rating. It has an Earnings Stability factor of 10 out of 99, despite some big shifts in EPS growth the past couple of years. Rounding out robust earnings metrics is its three-to-five year EPS Growth Rate of 33%, according to MarketSurge.
Mutual funds own 70% of shares, with 790 holding Wingstop stock in June, up from 781 in March and 724 in December.
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