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Wingstop (WING) Q1 Earnings: What to Expect this Time?

Dallas-based Wingstop Inc. WING is set to report first-quarter 2016 results on May 5, after the market closes. This will be the company’s fourth quarterly results after its IPO last June.

Last quarter, this restaurant operator posted a positive earnings surprise of 18.18% for the third consecutive quarter.

In fact, the company has surpassed earnings estimates in the trailing three quarters with an average positive surprise of 20.87%.

Let us see what is in store for the company this quarter.

Factors to Consider this Quarter

Wingstop, which operates as a chicken wings specialist, serves classic and boneless wings with bold flavors. In the last quarter, the company reported a 5.9% increase in domestic same-restaurant sales.

Wingstop has an enviable streak of reporting positive comps for 12 years. We expect the trend to continue in the to-be-reported quarter as well backed by menu innovation and unit growth. The company's store count has also grown nearly 19% over the past year We expect the store count to increase once again  in the to-be reported quarter and thereby boost revenues

However, high labor costs are likely to hurt the company’s profits in the to-be-reported quarter.

Earnings Whispers

Our proven model does not conclusively show that Wingstop is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here, as you will see below.

Zacks ESP: Earnings ESP for Wingstop is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 14 cents.

Zacks Rank: Wingstop has a Zacks Rank #2, which when combined with a 0.00% ESP makes surprise prediction difficult.

Meanwhile, the Sell-rated stocks (#4 or 5) should never be considered going into an earnings announcement.

Stocks to Consider

Here are some companies in the restaurant sector that investors may consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Dave & Buster's Entertainment, Inc. PLAY, with an Earnings ESP of +3.39% and a Zacks Rank #1.

The Wendy's Company WEN, with an Earnings ESP of +16.67% and a Zacks Rank #2.

Red Robin Gourmet Burgers Inc. RRGB, with an Earnings ESP of +0.91% and a Zacks Rank #3.

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
RED ROBIN GOURM (RRGB): Free Stock Analysis Report
 
WENDYS CO/THE (WEN): Free Stock Analysis Report
 
DAVE&BUSTRS ENT (PLAY): Free Stock Analysis Report
 
WINGSTOP INC (WING): Free Stock Analysis Report
 
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