Can Wingstop (WING) Pull a Surprise this Earnings Season?
Dallas-based Wingstop, Inc. WING is set to report fourth-quarter and full-year 2016 results on Mar 2, after the market closes. This will be the company’s seventh quarterly results after its IPO in Jun 2015.
Last quarter, this restaurant operator posted a positive earnings surprise of 8.33%. In fact, the company has surpassed earnings estimates in all of its six quarters, recording an average positive surprise of 11.99% in the trailing four quarters.
Wingstop Inc. Price and EPS Surprise
Wingstop Inc. Price and EPS Surprise | Wingstop Inc. Quote
Let’s see how things are shaping up for this announcement.
Factors to Consider
Wingstop, which operates as a chicken wings specialist, serves classic and boneless wings with bold flavors. The company has been reporting positive comps for over 12 years on the back of menu innovation and solid unit development. We expect the trend to continue in the to-be-reported quarter as well.
Further, the company’s investments in technology to boost online ordering along with migration to a national advertising platform should drive the quarter’s results. In fact, Wingstop continues to grow its online ordering mix and its partnership with a firm called Conversable is likely to increase convenience for social media users, which should improve traffic. Moreover, the company’s new POS system integrates online orders straight to the kitchen, which is expected to further bolster online ordering growth.
However, higher costs related to new openings and remodeling of units are likely to dent the company’s profits in the fourth quarter. Additionally, a choppy sales environment in the overall restaurant space might limit revenue growth.
Earnings Whispers
Our proven model does not conclusively show that Wingstop is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.
Zacks ESP: Earnings ESP for Wingstop is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 14 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Wingstop carries a Zacks Rank #2, which when combined with an ESP of 0.00% makes surprise prediction difficult.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.
Stocks to Consider
Here are some companies in the broader Retail-Wholesale sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:
Staples, Inc. SPLS has an Earnings ESP of +4.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Best Buy Co., Inc. BBY has an Earnings ESP of +1.81% and a Zacks Rank #3.
Costco Wholesale Corporation COST has an Earnings ESP of +0.74% and a Zacks Rank #3.
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