On Friday, Stifel reaffirmed its Buy rating and $400.00 price target for Wingstop (NASDAQ:WING), following the company's latest financial maneuvers. The company, currently valued at $9.8 billion, has demonstrated strong momentum with a 37% return over the past year. According to InvestingPro analysis, Wingstop is trading at premium multiples, reflecting market confidence in its growth trajectory. Wingstop has recently completed a securitized financing transaction, issuing $500 million of 5.858% Class A-2 notes due in December 2031.
Moreover, the company expanded its Variable Funding Note (VFN) facility by $100 million, bringing the total capacity to $300 million. InvestingPro data shows the company operates with a moderate debt level and maintains a strong financial health score of 3.15, labeled as "GREAT."
In addition to these financial updates, Wingstop announced the commencement of a $250 million Accelerated Share Repurchase (ASR) in the fourth quarter. This move comes after the near completion of the previous $250 million share repurchase authorization, with $61.1 million remaining unused as of the third quarter. Furthermore, Wingstop's board of directors has approved a new share repurchase authorization of up to $500 million, which includes the ASR.
Stifel has adjusted its earnings per share (EPS) projections for Wingstop to reflect the net impact of these financial activities. The firm notes that while there will be higher interest expenses due to the new debt, these will be partially offset by a reduced share count from the repurchase program. Consequently, Stifel has revised its FY24 earnings estimate down slightly to $3.60 from $3.62 and its FY25 estimate to $4.03 from $4.48. The analyst's comments highlight the balance between the increased costs of financing and the potential benefits of share repurchases on the company's future earnings.
With revenue growth of 35% in the last twelve months and analysts anticipating continued sales growth, Wingstop maintains a strong growth profile despite the revised estimates.
In other recent news, Wingstop has reported a significant increase in Q3 earnings per share (EPS) of $0.88, marking a 35.4% rise, along with a substantial 38.8% growth in total revenue to $162.5 million.
The company's domestic same-store sales also rose by 20.9%. Furthermore, Wingstop has revised its net unit growth guidance upwards, now planning to open between 320 and 330 new units.
BTIG has reaffirmed its Buy rating on Wingstop shares, indicating confidence in the company's strategic supply chain adjustments and their positive impact on financial performance. However, Piper Sandler, Citi, BMO Capital Markets, and Stephens have all adjusted their price targets for Wingstop, reflecting the company's financial performance and market dynamics.
Citi maintained a Neutral rating on Wingstop but reduced the price target for the company's shares from $440.00 to $315.00 due to concerns over short-term challenges. BMO Capital Markets also adjusted its price target for Wingstop to $335, while maintaining a Market Perform rating on the stock.
Stephens kept its Overweight rating but adjusted its price target to $468. BTIG has upgraded Wingstop's stock from Neutral to Buy, setting a new price target of $370, citing the company's acceleration in unit development and best-in-class unit economics.
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