Is Wingstop Now Fairly Priced After Its Recent Share Price Pullback?

• Wondering if Wingstop is finally priced for perfection or quietly setting up a value opportunity? Let us unpack what the current share price is really implying about its future growth.
• After a strong multi year run, the stock has pulled back, with shares down about 10.5% over the last week, 1.6% over the past month, and 19.5% year to date. However, the 3 and 5 year returns are still up 52.9% and 70.6% respectively.
• That reset has come as investors digest a mix of headlines around restaurant industry cost pressures and shifting consumer spending patterns, alongside continued interest in scalable, asset light franchise models like Wingstop. In other words, the narrative has become more nuanced, and the price is no longer moving in a straight line.
• Right now, Wingstop scores just 2/6 on our valuation checks, suggesting the market might still be pricing in a lot of future growth. We will walk through DCF, multiples, and other methods next, then finish with a more holistic way of thinking about what the stock is really worth.

Wingstop scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Wingstop Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth today by projecting its future cash flows and discounting them back into current dollars. For Wingstop, we start with last twelve month Free Cash Flow of about $54.7 million, then use analyst forecasts and longer term assumptions to map out how that cash flow could grow.

Analysts currently project Free Cash Flow to rise to around $142.7 million in 2026 and $287.2 million by 2029, before Simply Wall St extrapolates further growth out to 2035. These future cash flows, all in dollars, are then discounted back using a required rate of return under a 2 Stage Free Cash Flow to Equity model to arrive at an intrinsic value of roughly $216.24 per share.

Compared to the current share price, this DCF points to the stock trading about 8.8% above its estimated fair value, which suggests it is slightly overvalued but not dramatically mispriced.

Result: ABOUT RIGHT

Wingstop is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Wingstop.

Approach 2: Wingstop Price vs Earnings

For profitable companies like Wingstop, the price to earnings ratio is a useful way to gauge how much investors are willing to pay for each dollar of current earnings. In general, faster growth and lower risk can justify a higher PE multiple, while slower growth or higher uncertainty usually call for a lower, more conservative range.

Wingstop currently trades on a PE of about 37.5x, which is well above the broader Hospitality industry average of around 24.8x, but below the peer group average of roughly 52.3x. To move beyond those broad comparisons, Simply Wall St calculates a proprietary Fair Ratio of 17.2x. This is the PE multiple the company might reasonably deserve once you factor in its earnings growth profile, margins, industry, size and risk characteristics.

This Fair Ratio framework is more targeted than a simple industry or peer comparison, because it adjusts for what makes Wingstop different, rather than assuming all restaurant stocks should trade on similar multiples. Comparing the current 37.5x PE with the 17.2x Fair Ratio suggests the market is still paying a substantial premium for Wingstop shares, implying they may be priced ahead of fundamentals.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Wingstop Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simple stories investors create on Simply Wall St's Community page that connect their view of a company to specific forecasts for revenue, earnings, margins and, ultimately, a fair value that can be compared to today’s share price to decide whether to buy, hold or sell. Those Narratives then update dynamically as new news or earnings arrive. For Wingstop, one investor might build a bullish Narrative around rapid international expansion, smart kitchens and digital loyalty to justify a higher fair value closer to the most optimistic analyst target of about $477. A more cautious investor could focus on softer demand, rising labor costs and menu concentration to anchor a lower fair value nearer the most conservative target of about $185, showing how the same company can support very different, but clearly quantified, views.

Do you think there's more to the story for Wingstop? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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