Wingstop gave investors a peek at Q1 results and may have set the bar too high

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Wingstop gave investors a peek at Q1 results and may have set the bar too high


Wingstop Inc.’s
WING,
+6.81%

decision to pre-release first-quarter results may have some unintended consequences for the chain of aviation-themed restaurants specializing in chicken wings, Stifel analysts say.

“[W]e surmise management felt it needed to clarify any sales uncertainty created by the number of exogenous factors (e.g., weather, stimulus, etc.) during the quarter,” analysts led by Chris O’Cull wrote in a note.

Stifel notes that Wingstop normally doesn’t give earnings information ahead of earnings day.

“We are disappointed the company did not wait until it could provide a range of profitability for 1Q because it may run the risk of Street estimates moving too high on the significant sales beat.”

Stifel rates Wingstop shares buy with a $165 price target.

See: Applebee’s launches delivery-only chicken brand featuring Cheetos-flavored wings

Wingstop said fiscal first-quarter sales jumped 30% to $558.9 million. Domestic same-store sales rose 20.7% and company-owned restaurant same-store sales rose 13.4%. And digital sales were up 63.6%.

The FactSet consensus for first-quarter domestic same-store sales growth was 13.7% until March 31, when the preliminary sales announcement was made.

Wingstop is scheduled to announce first-quarter earnings on April 28.

Wingstop reported an adjusted earnings miss in its fourth-quarter report in February.

A Wells Fargo report published Monday said restaurants will make gains in 2021 as the vaccine rollout, pent-up demand and excess savings send consumers out of the house for a meal.

However, Wingstop is facing tough comparisons over the coming quarters even if the long-term growth potential is intact, say UBS analysts.

Also: Olive Garden parent is raising wages for hourly workers as customers start dining in again

“Next catalysts are likely better visibility into sales trends against tough
compares and the post-pandemic trajectory, as well as earnings flow-through,” wrote UBS analysts.

UBS rates Wingstop shares neutral with a $155 price target.

Truist Securities expects a same-restaurant sales decline in the second quarter and then “a quick snap back to positive trends,” in the third quarter.

Truist rates Wingstop shares buy with a $173 price target.

Wingstop shares are up 2.5% over the past three months, and have gained 70.8% over the last year.

The benchmark S&P 500 index
SPX,
+1.18%

is up 59.1% over the past 12 months.



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