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Bull of the Day: Wingstop (WING)

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Wingstop Inc. (WING - Free Report) is one of the fastest growing restaurant chains in America. This Zacks Rank #1 (Strong Buy) is expected to see double digit sales growth over the next 2 years.

Wingstop operates and franchises more than 1,000 restaurants across the United States and internationally in Mexico, Singapore, the Philippines, Indonesia, the UAE, Malaysia, Saudi Arabia and Colombia. It's a mid-cap company with a $1.5 billion market cap.

It features classic and boneless wings in 11 distinctive flavors. They are always cooked to order. There are house made sides as well, including seasoned fries.

Wingstop has grown its domestic same store sales for 14 consecutive years.

Another Beat in the First Quarter

On May 3, Wingstop reported its fiscal first quarter results and beat the Zacks Consensus again. Earnings were $0.25 versus the consensus of $0.20.

It extended its impressive earnings surprise streak.

Wingstop has never missed since its 2015 IPO.

Total revenue rose 11.9% to $37.4 million on strong same-store-sales.

Domestic same store sales jumped 9.5%, up from a decline of 1.1% a year ago.

The store count also rose 12.2% to 1,157 global locations.

The company increased spending on national television advertising, with strong results.

It has several initiatives which should spur growth including rolling out nationwide delivery. It's testing the concept in three markets.

Additionally, it sees a long growth trajectory in the international business. For instance, it doesn't yet have locations in Europe.

Reaffirmed Guidance

Even with yet another beat, and the outstanding same-store-sales comparables, Wingstop reaffirmed its full year outlook.

That includes low single digit domestic same-store-sales growth.

That seems pretty conservative, given that it has already comped first quarter at 9.5%.

Estimates on the Rise

The analysts liked what they heard, and with wing costs coming down, that should boost earnings the next few quarters as well.

8 estimates were raised for 2018 in the last 60 days with the Zacks Consensus Estimate rising to $0.84 from $0.76. That's earnings growth of 13.5%.

7 estimates were also increased for 2018, pushing the Zacks Consensus up to $1.01 from $0.93. That's another 20% earnings growth.

2018 sales are expected to rise 41% and another 11.8% in 2019.

Shares at New Highs

Shares have been trading at new all time highs in 2018 as they've gained 34% year-to-date versus just 3.4% for the S&P 500.

Here's the 2-year chart.

Wingstop is definitely a growth play. It's trading with a forward P/E of 62. That's higher than two other restaurant growth stars, Chipotle Mexican Grill, Inc. (CMG - Free Report) or Domino's Pizza, Inc. (DPZ - Free Report) .

But investors are rewarded with a dividend, currently yielding 0.5%, which is an added bonus given the size of the company.

For investors looking to add to their restaurant exposure, and who want an aggressively growing brand, Wingstop should be on the short list.

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Wingstop Inc. (WING) - free report >>

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