Wingstop shares drop after earnings miss offsets sales growth

Wingstop Inc. shares fell 12% in early Wednesday trading after the Dallas-based restaurant company reported quarterly profit below Wall Street expectations. The decline came even as revenue exceeded the FactSet consensus and U.S. same-restaurant sales grew faster than analysts had projected.

The company reported net income of $25.7 million, equal to 88 cents a share, for the quarter. That compared with $19.5 million, or 65 cents a share, in the same period a year earlier. Analysts tracked by FactSet had expected earnings of 96 cents a share.

Revenue rose to $162.5 million from $117.1 million a year earlier, ahead of the $160.0 million FactSet consensus. The figures showed continued top-line expansion for the chicken-wing chain, but the earnings shortfall weighed on the stock in premarket or early trading after the release.

U.S. same-restaurant sales increased 20.9%, according to the company. FactSet had expected growth of 11.4%. Same-restaurant sales measure sales at locations open for a comparable period, a metric investors use to separate demand at existing stores from growth generated by new openings.

Chief Executive Michael Skipworth said the sales performance was driven by higher transaction growth. The company did not provide further detail in the reported figures on pricing, average check size or mix.

Wingstop also expanded its store base during the period. The company opened a record 106 net new units, which it said represented 17.1% year-on-year growth in systemwide restaurants. Net new units reflect openings after accounting for closures, while systemwide restaurants include the broader restaurant base rather than only company-owned locations.

The company kept its full-year outlook for roughly 20% domestic same-store sales growth. It raised its expected unit-opening range for the year to 320 to 330 net new restaurants, compared with previous guidance of 285 to 300.

The market reaction followed a strong run for the stock. Wingstop shares had gained 44% in the year to date before the reported move, compared with a 22% gain for the S&P 500 over the same period, according to MarketWatch data.

For restaurant operators, the combination of comparable-sales growth and new-unit development is a central driver of revenue expansion. Investors also track whether higher sales convert into earnings per share, particularly when a stock has already outperformed the broader market.

This story draws on original reporting from MarketWatch.