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The stock market correction has not lasted very long, but there are more than a few growth actions which are well broken.
Wingstop (Nasdaq: wing) is one of them. The actions of the Slonger fast wing are now down 52% compared to their summit last fall, because investors were frightened by weakening the feeling of consumers, disappointing the 2025 directives and lacking first -line estimates in its profit report of the fourth quarter. A high assessment also accelerated the sale, as the stock was at the cost of perfection six months ago.
However, after resetting prices, Wingstop is looking for an attractive purchasing opportunity. Here are three reasons why.
Image source: Wingstop.
In the catering industryThe winners tend to continue to win, and Wingstop’s success testifies. The company is easily the largest concept of fast food wing in the country, and its opening model in level B real estate locations, maintains low costs for franchisees and relying on digital and delivery channels has paid off.
Wingstop has provided 20 consecutive years of sales growth in comparable stores, a sequence that includes the financial crisis and the pandemic and is practically unequaled in the catering industry. The company has also reported two -digit growth comparable to sale in several of these quarters.
In fact, in the fourth quarter, he posted a growth of 10.1% of sales at comparable interior stores and sales growth with comparable stores of 19.9% for the year, in addition to 18.3% in 2023, which gives him a compound of two years over 40%.
A chain of restaurants capable of growing at a pace like this clearly has a product and a brand that resonates with its customers. In addition, Wingstop was able to increase sales with two -digit -comparable stores while aggressively opening new locations, showing that cannibalization has not been a problem.
The Wingstop action dropped by 13% on February 20 and continued to slip from there when the company failed high level estimates in its fourth quarter profits report and offered disappointing advice for 2025.
Management said it expected the growth in sales of people with a low to-one-minuscule in 2025, a net slowdown of 19.9% in 2024 or 10.1% in the fourth quarter. When calling the results, the company explained that directives were mainly due to very strong growth in 2024, including growth of 20% in the first quarter in 2024.
However, annual directives to start the year tend to be conservative for most companies, and Wingstop also has a scheme to do so. In fact, in the fourth quarter of 2023, the company guided for growth comparable to mid-chiffre, and clearly blown away with a growth of 20% of sales.
Management teams generally give objectives that they are convinced that they can strike. This does not mean that Wingstop goes beyond his advice again, but this forecast is not a reason in itself to doubt the company.
Wingstop develops quickly on national and international markets, and the company’s franchise model allows it to open stores quickly in new markets and in small footprints that other restaurant chains could avoid.
Wingstop opened 349 new net restaurants in 2024, bringing its large total to 2,563 locations, and it expects to increase its base from 14% to 15% in 2025, showing that even if its growth in comparable store sales is modest, the company can still provide growth in new stores.
The company has only a few hundred stores on international markets, and it can follow in the footsteps of fast food chicken brands that succeed as KFC (owned by Yum! Marks) by developing abroad.
Wingstop is currently targeting 7,000 locations around the world, about Triple what it has today, and the company could raise this objective if sales with comparable stores continue to be robust and there is the request of the franchisees.
Wingstop’s evaluation seems much more reasonable after the recent decline, because it is negotiated with a price / benefit ratio of 56, which seems reasonable for a business with its growth potential.
While the market -contrary winds could persist in 2025, Wingstop could also go up again if he could beat his sales advice in the components of people for the year. In the long term, the company seems well positioned for market growth, both as a business and in stock.
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