Wingstop Inc (WING, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $158.69, Wingstop Inc has witnessed a surge of 2.76% over a period, marked against a three-month change of -19.19%. A thorough analysis, underlined by the GuruFocus Score Rating, suggests that Wingstop Inc is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
- 1. Financial strength rank: 5/10
- 2. Profitability rank: 10/10
- 3. Growth rank: 10/10
- 4. GF Value rank: 9/10
- 5. Momentum rank: 10/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high profitability rank and a slightly lower financial strength rank, GuruFocus assigned Wingstop Inc the GF Score of 97 out of 100, which signals the highest outperformance potential.
Understanding Wingstop Inc Business
Founded in 1994 in Garland, Texas, Wingstop Inc is a restaurant operator specializing in indulgent bone-in and boneless chicken wings, chicken tenders, fries, and recently chicken sandwiches. The firm's footprint has grown quickly since its inception, reaching nearly 2,000 global stores at the end of 2022, rendering Wingstop the 40th-largest restaurant chain in the U.S. by system sales, according to Technomic data. With a 98% franchised model, Wingstop generates the lion share of its revenue from franchise royalties and advertising fees, with the remainder derived from a small footprint of company-owned stores. The company has a market cap of $4.76 billion and sales of $413.43 million, with an operating margin of 25.3%.
Profitability Rank Breakdown
The Profitability Rank shows Wingstop Inc's impressive standing among its peers in generating profit. Wingstop Inc's Operating Margin has increased (2.49%) over the past five years, as shown by the following data: 2018: 25.15; 2019: 21.49; 2020: 21.82; 2021: 24.87; 2022: 25.78. Wingstop Inc's strong Predictability Rank of 5.0 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Wingstop Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 21%, which outperforms better than 93.05% of 331 companies in the Restaurants industry. Moreover, Wingstop Inc has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 27.6, and the rate over the past five years is 22.1. This trend accentuates the company's continued capability to drive growth.
Conclusion
Given the company's financial strength, profitability, and growth metrics, the GuruFocus Score Rating highlights Wingstop Inc's unparalleled position for potential outperformance. This makes it an attractive investment opportunity for those seeking to capitalize on its robust financial performance and growth prospects. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
