Wingstop's Growth Deceleration Raises Investor Concerns

Wingstop reports slower growth expectations for 2025 but maintains strong restaurant openings. This may impact stock valuation negatively, raising concerns among investors.

Date: 06-03-2025

AI Rating: 4

Wingstop Financial Overview

Shares of Wingstop (NASDAQ: WING) fell 21.2% in February following the announcement of its financial results for Q4 2024. Despite achieving its 21st consecutive year of same-store sales growth, a noted deceleration in growth rates has raised eyebrows among investors.

In 2023, U.S. same-store sales increased by 18%, followed by a 20% increase in 2024. However, projections for 2025 suggest growth limited to a low to mid-single-digit rate. This clearly indicates a slowdown that could be concerning for investors.

Immediate Impact of EPS and Growth Rate

The significant drop in stock price can be attributed to these concerns over anticipated growth rates. While the company has successfully maintained impressive same-store sales figures over the years, the forthcoming expectations are much more modest, which can lead to a reevaluation of Wingstop's current stock valuation.

Expansion and Location Growth

On a positive note, Wingstop is expanding its presence aggressively, having opened 349 net new locations in 2024 and expecting 360 to 380 new restaurants in 2025. This expansion effort indicates a commitment to grow its footprint, which could provide long-term upside. There is also a backlog of over 2,000 potential locations that franchisees want to open in the coming years.

Now, Wingstop's strategy appears twofold: maintain same-store sales growth while pressing for aggressive expansion. The latter could attribute to more steady revenue growth in future quarters despite the reported slowdown in same-store sales growth rates.

Stocks: WING