hughes16
8年前
Kase Capital - Short Thesis on Wingstop
Whitney Tilson's Short Thesis of Wingstop
Why Am I Short the Stock?
Valuation is absurd: 52x trailing EPS (43x NTM); 29x trailing EBITDA (24x NTM); 11x trailing revenues (10x NTM)
Same store sales growth is decelerating
An estimated half of same store sales growth in recent years has been driven by price increases, which is likely unsustainable
Little that is proprietary or unique about this business – these are chicken wing restaurants
Plenty of competitors, many much larger, with deeper pockets and better technology
Doubt Wingstop can nearly triple the number of units in the US to management’s stated goal of 2,500
Market is much more competitive and may be becoming saturated (roughly half of all chicken wing restaurants in the US have been opened the last 5 years)
Nearly 2/3 of Wingstops today are in 2 states (Texas and California) so the business and brand are largely unproven elsewhere
After 22 years and growth to over 1,000 units, company generated a mere $91 million in revenues and $15 million in net income in 2016
wingstop sales
Investor presentation boasts of phenomenal same store sales growth but note the slowing growth
In reality, Wingstop’s same store sales growth has decelerated significantly, despite increasing the pace of new unit growth
Gross margin of Wingstop’s company-owned stores has also declined significantly
Wingstop’s 2017 Guidance Indicates a Very Disappointing Year:
On the Q4 2016 call in March, management said Q1 2017 comps are negative 2.6% so far plus the cost of wings are 10% higher YoY – meaning Wingstop could report unexpectedly weak sales, margins and profits in Q1
Wingstop has issued the following guidance for 2017:
System wide unit growth of approximately 13% to 15%
Low single digit domestic same store sales growth
SG&A of between $34-35 million
Net income between $18.5-$18.8 million
Fully diluted EPS growth of 8-10%
Adjusted EBITDA growth of 13-15%
This guidance implies another 300bps of margin decline
Negative comps and plunging margins are totally inconsistent with a stock trading at such a rich valuation, so something has to give: either business metrics start to improve dramatically or the stock is likely to get cut in half (or more)
Betting on the latter (and so was Roark Capital)
Public shareholders are Wingstop’s 4th owners – and the Prior Owner has already cashed out entirely:
Founded in 1994; acquired by Gemini Group in 2003; acquired by Roark Capital in 2010; taken public in 2015
Roark specializes in franchise businesses and currently owns 16 quick/limited/full service restaurants chains – typically holds for a decade or more
In the case of Wingstop, rushed to dump its entire stake:
June 2015: IPO – 3.2 million shares sold at $19
March 2016: 6.3 million shares sold at $24
July 2016: special dividend of $2.90/share, bringing debt/EBITDA to 5.2x
August 2016: 6 million shares sold at $29.25
November 2016: all of remaining 6.8 million shares sold at $26.28
Why the rush? My guess is that Roark saw a possible fad, oversaturation, and the signs of slowing growth, so wisely took opportunity to cash out at an absurd valuation
Summary and Price Target:
Wingstop is an okay business at best and there are major signs of deterioration
Business is largely undifferentiated and faces ferocious competition from all sides
Only proved that its business and brand work in two states, yet its valuation assumes that it can scale rapidly across the US and abroad – a highly questionable proposition
Given the stock is currently priced for perfection, if I’m wrong, it has little upside – and if I’m right, look out below!
A DCF analysis, even assuming favorable growth and margin increases for the next decade, yields a share price roughly half today’s level
Even at that price, stock would still be priced at more than 25x trailing EPS
This is my largest position at 3.1%
There is plenty of borrow at negligible cost
Whos_Who
9年前
Jim Cramer's, Mad Money, featured WingStop. Did you catch it?
One stock that was beaten down hard last year was Wingstop, the chicken wing chain with more than 800 locations that came public in June. Its stock surged from $30 to $19 on the first day of trading and has since been crushed.
However, Cramer thinks it may have come down so much that it could be intriguing. Wingstop did report a strong quarter in November, delivering a .02-cent earnings beat from a .09-cent basis and deceleration in same-store growth.
So with the restaurant stocks in pain lately, could it be time to take another look at Wingstop? To find out, Cramer spoke with Charlie Morrison, the company's CEO.
"We have one of the most efficient economic models probably in the business today... 75 percent of our business is carry out. We keep it very simple, very efficient and it creates great returns for our franchisees and they continue to keep growing the business with us," Morrison said.
Whos_Who
9年前
Wingstop Becomes Oversold (WING)
Legendary investor Warren Buffett advises to be fearful when others are greedy, and be greedy when others are fearful. One way we can try to measure the level of fear in a given stock is through a technical analysis indicator called the Relative Strength Index, or RSI, which measures momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.
In trading on Thursday, shares of Wingstop Inc (WING) entered into oversold territory, hitting an RSI reading of 29.7, after changing hands as low as $20.36 per share. By comparison, the current RSI reading of the S&P 500 ETF (SPY) is 60.0. A bullish investor could look at WING's 29.7 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side.
http://www.thestreet.com/story/13372789/1/wingstop-becomes-oversold-wing.html
Whos_Who
9年前
Wingstop Inc. To Announce Third Quarter 2015 Financial Results On November 5, 2015
Wingstop Inc. To Announce Third Quarter 2015 Financial Results On November 5, 2015
GLOBENEWSWIRE
Oct 12, 2015 8:00 AM EDT
DALLAS, Oct. 12, 2015 (GLOBE NEWSWIRE) -- Wingstop Inc. (NASDAQ:WING) today announced that it will host a conference call and webcast to discuss its third quarter 2015 financial results on Thursday, November 5, 2015 at 5:00 PM Eastern Time.
Hosting the conference call will be Charlie Morrison, President and Chief Executive Officer, and Mike Mravle, Chief Financial Officer. A press release with third quarter 2015 financial results will be issued that same day, shortly after the market closes.
The conference call can be accessed live by dialing 855-327-6837 or for international callers by dialing 631-982-4565. A replay will be available two hours after the call and can be accessed by dialing 877-870-5176 or for international callers by dialing 858-384-5517; the passcode is 116117. The replay will be available through Thursday, November 12, 2015.
The conference call will also be webcast live and later archived on the investor relations section of Wingstop's corporate website at ir.wingstop.com under the 'News & Events' section.
Whos_Who
9年前
Wingstop : to land in Palestine
10/06/2015 | 07:16 am
Oct. 06--Construction is underway for the newest addition to the Palestine restaurant scene. A new Wingstop will be opening its doors near the end of October, according to BSG Wing Group brand manager Rodney Norman.
"I have had nothing but positive feedback from everyone," Norman said. "As soon as I parked that Wingstop (vehicle) out there, I'll get four or five people stop by and yell out the window, 'We're so happy you're here.' So it's nothing but good responses so far. We're pretty positive that it's going to be a good spot for us."
While the community has shared its excitement, there is some concern about the location. According to city Development Services Director Jeffrey Lyons, the company moved the front door of the establishment to meet the city's requirements for the sale of alcohol. The city requires the front door of any establishment that sells alcohol to be 300 feet away from the front door of a school. City Secretary Teresa Herrera said that Wingstop has already sent an application to the Texas Alcoholic Beverage Commission.
Palestine Independent School District Superintendent Jason Marshall said that the district welcomed new business to the city but held a concern about the impact of the sale of alcohol near the campus.
"Palestine ISD is a business-friendly school district, and the district is very appreciative of businesses for coming to Palestine and investing in the community," Marshall said. "The district's only concern with the opening of the Wingstop restaurant is that the restaurant will be selling consumable alcohol on site and in a location that shares a busy intersection with a school campus."
The new restaurant will take over the previous Radio Shack location in Palestine Plaza. Norman said that the company had been looking for a location for months before finding the current one.
"We wanted in this shopping center," Norman said. "We've looked at several sites, and this was the one we wanted. There was nothing available here for a while, and this (Radio Shack) was the first thing that we had seen in the last six months."
Currently, the company is working on renovations to the location. Norman said that the location will hold a soft opening before officially opening for business on a date that has yet to be set.
The company expects Wing Stop to bring nearly 20 jobs to the area mainly cashiers and cooks. Applications can be found both online at www.wingstop.com or on location this week according to Norman.
___
(c)2015 the Palestine Herald-Press (Palestine, Texas)
Whos_Who
9年前
Wingstop Recognized by International Franchise Association for Inaugural Flavor Tour, a Community Impact Project
Globe Newswire
Wingstop Serves Flavor and Brings Goodwill to Deserving Communities Across the Country
October 01, 2015: 08:00 AM ET
(GLOBE NEWSWIRE) -- Wingstop Inc. (NASDAQ:WING), the award-winning wing concept with more than 800 locations around the globe, has been recognized by the International Franchise Association (IFA) as a recipient of the Franchising Gives Back Annual Awards. Wingstop was selected as a silver winner in the Innovation and Impact category for its successful Wingstop Flavor Tour (#WingstopTour) which visited 10 cities across the country over the course of the summer, fueled by a mission of giving back to communities.
The IFA is the world's oldest and largest organization representing franchising worldwide. Franchising Gives Back recognizes companies who are giving back in order to move communities forward while inspiring their peers to do the same. Furthermore, the Innovation and Impact category of this award recognizes an IFA member whose charitable or community support program focuses on using creative, innovative ways to maximize the impact on their community with limited resources.
The mission of the Wingstop Flavor Tour is to serve flavor and bring goodwill to communities that have embraced the Wingstop brand. Across the country, Wingstop worked with NBA teams and charitable organizations to uplift underserved youth and families through community renewal projects and charity events. The tour kicked off in Brooklyn, New York on June 22 and traveled to Atlanta, Chicago, St. Louis, Dallas, Denver, Las Vegas, the San Francisco Bay Area and Los Angeles before ending in San Antonio. During the tour, Wingstop partnered with organizations such as the Brooklyn Nets, the Dallas Mavs Foundation, the Golden State Warriors, the Lakers Youth Foundation, Hands on Atlanta, and several food banks as well as Boys & Girls Clubs to give back to local communities. Throughout the course of the tour, Wingstop:
Donated over $250,000 to local charity organizations.
Visited 10 cities and partnered with over 20 charities.
Served over 100,000 free wings.
Served food to over 3,500 children at afterschool and summer programing service organizations.
"We are honored to be recognized by the IFA as a silver award winner for our inaugural Wingstop Flavor Tour," commented Flynn Dekker, Chief Marketing Officer at Wingstop. "The primary goal of this tour was to give back and leave a lasting impact on the communities we visited. There are so many organizations out there whose mission is to elevate people within these communities. We wanted to assist those groups by giving them the resources to do even more. We were overwhelmed by the support from communities across the country who all came together to contribute to each project, with the common goal of giving back."
This award comes on the heels of last week's recognition at Nation's Restaurant News' Multi-Unit Foodservice Operators Conference (MUFSO), where Wingstop CEO and President Charlie Morrison was recognized as a 2015 Golden Chain Winner for his outstanding leadership.
Whos_Who
9年前
5 Top 2015 IPOs Will Be Added to the Russell Indexes This Week
By Lee Jackson September 28, 2015 11:05 am EDT
http://247wallst.com/investing/2015/09/28/5-top-2015-ipos-will-be-added-to-the-russell-indexes-this-week/
Wingstop Inc.(NASDAQ: WING) was another hot deal that has traded back down. Jefferies expects that 466,680 shares of the stock will bought on the close Wednesday for a total dollar amount of more than $11.9 million. That’s about 1.5 days of normal trading volume of the stock. The company franchises and operates restaurants under the Wingstop name that specialize in cooked-to-order, hand-sauced and tossed chicken wings. As of May 06, 2015, it operated approximately 750 restaurants in the United States, Mexico, Russia, Singapore, the Philippines and Indonesia. The shares closed Friday at $25.47.
Whos_Who
9年前
Wingstop Celebrates 800th Restaurant Opening.
The Wing Experts Continue on Growth Path Across the Country
September 28, 2015: 08:00 AM ET
DALLAS, Sept. 28, 2015 (GLOBE NEWSWIRE) -- Wingstop Inc. (NASDAQ:WING), the award-winning wing concept, is pleased to celebrate the opening of its 800th restaurant, which opened its doors earlier this month in Hillsborough, New Jersey.
"Our 800th opening is an exciting milestone for us and is a testament to the appeal of our brand and the hard work put in daily by all of our franchisees and team members," commented Charlie Morrison, President and Chief Executive Officer of Wingstop. "We are thrilled to serve flavor across more than 800 locations today, and continue to believe there is opportunity to expand to 2,500 locations across the United States alone."
Wingstop first opened its doors in 1994 in Dallas, Texas and plans to add 120 to 130 new franchise stores in 2015.
With a sole focus on cooked-to-order chicken, the Wingstop menu features traditional and boneless wings as well as chicken tenders all sauced and tossed in 11 original flavors including fan favorites Mango Habanero, Lemon Pepper, Garlic Parmesan and Original Hot. Sides are made fresh daily including hand-cut seasoned fries, made from #1 Idaho potatoes.
Whos_Who
10年前
Fiscal Second Quarter 2015 Financial Results
http://money.cnn.com/news/newsfeeds/articles/globenewswire/10145048.htm
DALLAS, Aug. 6, 2015 (GLOBE NEWSWIRE) -- Wingstop Inc. (NASDAQ:WING) today announced fiscal second quarter 2015 financial results for the period ended June 27, 2015 and also issued annual guidance for fiscal year 2015.
Highlights for the fiscal second quarter 2015 compared to the fiscal second quarter 2014:
• System-wide restaurant count increased 19.5% to 785, with 40 net franchised restaurant openings in the quarter
• Domestic same store sales increased 9.0%
• Total revenue increased 18.0% to $19.2 million
• Net income was $584,000, or $0.02 per diluted share, compared to $2.5 million, or $0.10 per diluted share
• Adjusted EBITDA*, a non-GAAP measure, increased 18.6% to $7.2 million
• Adjusted net income*, a non-GAAP measure, increased 19.6% to $3.2 million
• Adjusted earnings per pro-forma diluted shares*, a non-GAAP measure, was $0.11, an increase of 10.0% from the prior year
* Adjusted EBITDA, adjusted net income and adjusted earnings per pro-forma diluted shares are non-GAAP measures. Reconciliations of adjusted EBITDA, adjusted net income and adjusted pro-forma diluted EPS to the most directly comparable financial measures presented in accordance with GAAP, are set forth in the schedules accompanying this release. See "Non-GAAP Financial Measures."
President and Chief Executive Officer Charlie Morrison stated, "Wingstop enjoyed a strong quarter characterized by robust top-line growth as well as strong increases in adjusted EBITDA and adjusted net income. We have had a great start to the year with 73 net franchised restaurant openings. We are on track to deliver our 12th consecutive year of domestic same store sales growth with a 9.0% increase for the quarter. This demonstrates our ability to broaden our consumer appeal while driving repeat business and loyalty from our core demographic of millennials and families. We appreciate our team and franchise partners for their contributions to these outstanding achievements."
Morrison continued, "We believe Wingstop is well positioned to deliver sustainable and profitable growth, and that our brand has a significant expansion opportunity. We believe there is opportunity to grow up to 2,500 domestic restaurants longer-term through development in our existing markets as well as in new markets."
Key Operating Metrics
Thirteen Weeks Ended
June 27,2015 June 28,2014
*Number of system-wide restaurants open at end of period 785 657
*Number of domestic franchise restaurants open at end of period 714 612
*Number of international franchise restaurants open at end of period 52 26
*System-wide sales (in thousands) $ 202,793 $ 165,563
*System-wide domestic same store sales growth 9.0% 15.3%
*Adjusted EBITDA (in thousands) $ 7,247 $ 6,113
Fiscal Second Quarter 2015 Financial Results
Total revenue for fiscal second quarter 2015 increased 18.0% to $19.2 million from $16.3 million in the fiscal second quarter last year.
• Royalty revenue and franchise fees increased 24.6% to $11.4 million from $9.2 million in the fiscal second quarter last year. This is primarily due to a 20.1% increase in the number of franchised restaurants and domestic same store sales growth of 9.0%.
• Company-owned restaurant sales increased $0.7 million to $7.8 million from $7.1 million in the fiscal second quarter last year. The increase is the result of company-owned domestic same store sales growth of 9.5%.
Cost of sales increased 11.0% to $5.5 million from $5.0 million in the prior fiscal year's second quarter. As a percentage of company-owned restaurant sales, cost of sales increased 100 basis points to 70.5% from 69.5%. The increase was primarily driven by a 26% increase in the commodity cost of bone-in chicken wings, which was partially offset by lower labor costs and other restaurant operating expenses as a percentage of restaurant sales.
Selling, general & administrative expenses (SG&A) increased to $10.7 million from $5.6 million in the prior fiscal year's second quarter. The increase in SG&A was primarily due to a one-time fee of $3.3 million paid in consideration for the termination of our management agreement with Roark Capital Management, other one-time IPO expenses of $0.7 million, and headcount additions to support our future growth.
Net income in the fiscal second quarter 2015 was $584,000, or $0.02 per diluted share, compared to net income of $2.5 million, or $0.10 per diluted share in the prior fiscal year's second quarter.
Adjusted net income increased 19.6% to $3.2 million, or $0.11 per pro-forma diluted share, compared to $2.7 million, or $0.10 per pro-forma diluted share, in the prior fiscal year's second quarter. A reconciliation between net income and adjusted net income as well as diluted shares to pro-forma diluted shares is included in the accompanying financial data.
Restaurant Development
At June 27, 2015, there were 785 Wingstop restaurants system-wide. This included 733 restaurants in the United States, of which 714 are franchised restaurants and 19 are company-owned. Our international footprint consisted of 52 franchised restaurants across six countries. During the second quarter, there were 41 system-wide Wingstop openings, including 34 domestic franchised and 7 international franchised locations.
Fiscal Year 2015 Financial Outlook
Based on current information, we are providing the following guidance for fiscal year 2015, which ends on December 26, 2015:
• 120-130 net system-wide franchise restaurant openings
• Domestic same store sales increase of 6.5% to 7.0%
• Total revenue between $75.5 million and $76.0 million
• SG&A expenses between $33.0 million and $34.0 million (includes $3.3 million in management agreement termination fee, $0.2 million in management fees and $2.0 million in transaction costs related to March 2015 refinancing our credit agreement and our initial public offering)
• Adjusted EBITDA, a non-GAAP measure, between $26.8 million and $27.3 million
• Adjusted net income, a non-GAAP measure, between $11.8 million and $12.1 million
• Pro-forma diluted share count, a non-GAAP measure, of approximately 28.8 million
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