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Wingstop Second-Quarter Earnings Top Views; Shares Rise

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Wingstop Second-Quarter Earnings Top Views; Shares Rise

Wingstop (WING) reported stronger-than-expected fiscal second-quarter earnings and reiterated its global unit growth outlook, sending the restaurant chain's shares higher Wednesday.

Adjusted earnings rose to $1.18 a share for the quarter ended June 27 from $1 a year earlier, surpassing the FactSet-polled consensus of $1.02. Revenue grew 6.4% to $185.6 million, lagging Wall Street's $190.3 million estimate.

The company now expects full-year domestic same-store sales to fall 4% to 6%, compared with its previous guidance of a low-single-digit decline. However, it continues to project global unit growth of 15% to 16%.

Wingstop shares were up 4.7% in afternoon trade. The stock has lost about 40% in value so far this year.

Second-quarter domestic same-store sales decreased 7.5%, as transaction volumes contracted due to weak consumer spending, according to the company.

"While we were disappointed in our same-store sales result, (the second quarter) showcased the strength of our model, and we believe we are executing a strategy that will return same-store sales to growth," Chief Financial Officer Alex Kaleida said on an earnings call, according to a FactSet transcript. "Our development pipeline provides us with the visibility into future unit growth, and we continue to see broad-based demand across both domestic and international markets."

Morgan Stanley expected Wingstop to report another quarter of negative same-store sales. "However, we do see some signs of life, as (third-party) credit card sales data have shown improved trends in (the second quarter), possibly backed from some World Cup lift and the launch of loyalty," the brokerage said in a note to clients e-mailed July 15.

Wingstop's second-quarter royalty revenue and franchise fees increased to $86.8 million from $79.9 million a year earlier. Advertising fees and company-owned restaurant sales also rose.

"The pressure on our core guests remained more pronounced than we anticipated," Chief Executive Michael Skipworth said on the call. "Consumers are still willing to spend on meaningful occasions."

In its note, Morgan Stanley said that overall, US restaurant and food distribution companies likely saw a mixed second quarter, with largely stable industry trends that are masking "signs of strain."

Wingstop raised its quarterly dividend to $0.33 a share from $0.30, payable Sept. 5 to stockholders of record as of Aug. 15.

Price: $144.34, Change: $+9.47, Percent Change: +7.02%

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