Popular Stories

US$147: That's What Analysts Think Wingstop Inc. (NASDAQ:WING) Is Worth After Its Latest Results

Wingstop Inc. (NASDAQ:WING) shareholders are probably feeling a little disappointed, since its shares fell 3.5% to US$118 in the week after its latest quarterly results. Wingstop reported in line with analyst predictions, delivering revenues of US$64m and statutory earnings per share of US$0.34, suggesting the business is executing well and in line with its plan. This is an important time for investors, as they can track a company’s performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we’ve gathered the latest statutory forecasts to see what the analysts are expecting for next year.

View our latest analysis for Wingstop

earnings-and-revenue-growth
earnings-and-revenue-growth

Following the latest results, Wingstop’s 18 analysts are now forecasting revenues of US$279.3m in 2021. This would be a meaningful 17% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 28% to US$1.42. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$277.1m and earnings per share (EPS) of US$1.46 in 2021. The analysts seem to have become a little more negative on the business after the latest results, given the minor downgrade to their earnings per share numbers for next year.

It might be a surprise to learn that the consensus price target fell 8.4% to US$147, with the analysts clearly linking lower forecast earnings to the performance of the stock price. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. The most optimistic Wingstop analyst has a price target of US$170 per share, while the most pessimistic values it at US$120. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It’s pretty clear that there is an expectation that Wingstop’s revenue growth will slow down substantially, with revenues next year expected to grow 17%, compared to a historical growth rate of 23% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 22% next year. Factoring in the forecast slowdown in growth, it seems obvious that Wingstop is also expected to grow slower than other industry participants.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Wingstop. On the plus side, there were no major changes to revenue estimates; although forecasts imply revenues will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that in mind, we wouldn’t be too quick to come to a conclusion on Wingstop. Long-term earnings power is much more important than next year’s profits. At Simply Wall St, we have a full range of analyst estimates for Wingstop going out to 2023, and you can see them free on our platform here..

You should always think about risks though. Case in point, we’ve spotted 3 warning signs for Wingstop you should be aware of, and 1 of them can’t be ignored.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email [email protected].

View Article Origin Here

Related Articles

Back to top button