WING is now overvalued and could go down -45%

Apr 03, 2025, 12:00 PM
14.50%
What does WING do
Wingstop, headquartered in Addison, Texas, is a franchisor of cooked-to-order chicken wings, operating approximately 2,165 restaurants globally, with 98% owned by independent franchisees. The company went public on June 12, 2015, and employs 1,225 full-time staff.
Based on our analysis, Wingstop has received an overvalued rating of 1 out of 5 stars due to several concerning financial ratios that suggest a high valuation relative to its sector. The Price-to-Earnings (PE) ratio for Wingstop stands at a staggering 148.87, while the sector average is only 17.12. A high PE ratio indicates that investors are paying significantly more for each dollar of earnings compared to the sector, which may signal overvaluation. Additionally, the company's Dividend Yield is just 0.24%, far below the sector average of 1.48%. A lower dividend yield may indicate that the company is retaining more earnings for growth rather than returning value to shareholders, which could be a red flag for income-focused investors. Furthermore, the Return on Equity (ROE) for Wingstop is not applicable, indicating that the company may not be generating sufficient returns for its equity holders. This contrasts sharply with the sector average ROE of 1.98, which suggests that competitors are utilizing their equity more effectively. While Wingstop does exhibit a strong Net Profit Margin of 15.25%, which is considerably higher than the sector's 0.25%, the other ratios highlight potential risks for investors. In summary, the combination of a high PE ratio, low dividend yield, and lack of ROE data raises concerns about the sustainability of Wingstop's current market valuation. This is not a comprehensive overview of our valuation and should not be viewed as financial advice. Always do your own research before considering an investment.
📡️ Consumer Discretionary
Overvalued

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