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Wingstop (WING) Earnings & Revenues Surpass Estimates in Q1

Zacks Equity Research

Wingstop, Inc. WING reported first-quarter 2019 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Notably, the bottom line beat the estimates after missing in the preceding quarter.

Adjusted earnings came in at 22 cents per share, surpassing the Zacks Consensus Estimate of 20 cents but declined 12% year over year.

Revenues totaled $48.1 million, which outpaced the consensus mark of $46 million and also increased 28.5% from the prior-year quarter. This improvement was driven by higher royalty revenues and franchise fees as well as increase in advertising fees and related income.

Meanwhile, the company’s first-quarter royalty revenues, franchise fees and other increased 19.9% to $21.3 million. The upside was favored by 111 net franchise restaurant openings and 7.1% domestic comps growth.

Also, advertising fees and related income increased 53.5% year over year to $13.2 million. Company-owned restaurant sales moved up 22.7% in the quarter to $11 million from the year-ago quarter. The increase was primarily due to acquisitions of five franchised restaurants. Also, a 4.7% rise in company-owned domestic same-store sales favored total company-owned sales.

Expenses

Cost of sales, as a percentage of company-owned restaurant sales, increased 480 basis points (bps) in the quarter under review to 72%, given the cost leverages from comps growth and a 10% decrease in costs of bone-in chicken wings.

However, selling, general & administrative expenses (SG&A) increased 15.7% in the reported quarter due to $1.6 million costs-related headcount and $0.6 million costs associated with national adverting campaign.

Wingstop Inc. Price, Consensus and EPS Surprise

Wingstop Inc. Price, Consensus and EPS Surprise | Wingstop Inc. Quote

Balance Sheet

Cash and cash equivalents as of Mar 30, 2019, were $13.6 million, up from $12.5 million as of Dec 29, 2018. Long-term debt increased to $308.9 million at the end of quarter from $309.4 million as of Dec 29, 2018.

Outlook

Wingstop expects more than 10% system-wide unit growth for the long term. Domestic comps are expected to grow in low-single digit.

For 2019, the company expects domestic same store sales growth by mid-single digit. Earnings are expected to be approximately 72-74 cents per share. The Zacks Consensus Estimate for full-year earnings is currently pegged at 77 cents.

Zacks Rank & Peer Releases

Wingstop currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Darden DRI reported third-quarter fiscal 2019 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate. Adjusted earnings of $1.80 per share beat the Zacks Consensus Estimate of $1.75. The bottom line also increased 5.3% year over year on the back of higher revenues.

Chipotle CMG reported better-than-expected results in the first quarter of 2019. Adjusted earnings came in at $3.40 per share, which exceeded the Zacks Consensus Estimate of $3.01 by 13%. The bottom line also grew 59.6% from the year-ago quarter, backed by increased revenues and lower food costs.

Domino’s DPZ reported mixed first-quarter 2019 financial numbers, wherein earnings outpaced the Zacks Consensus Estimate but revenues missed the same. Adjusted earnings of $2.20 per share outpaced the Zacks Consensus Estimate of $2.07 and increased 10% on a year-over-year basis. The bottom-line improvement was driven by higher net income and lower diluted share count as a result of share repurchases.

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