Why Wingstop Stock Is Flying High Today

Key Points

• Wingstop's earnings increased by 7.5% year over year while revenue flew 12% higher.

• Negative same-store growth should show improvement as the company implements a data-driven restaurant management system.

• 10 stocks we like better than Wingstop ›

Shares of Wingstop (NASDAQ: WING) fluttered higher on Wednesday, following a strong earnings report. Wingstop opened the trading session 29.2% higher, backing down to a still-impressive 26.1% gain as of 2:20 p.m. ET.

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Wingstop's Q2 by the numbers

The chicken-based restaurant chain saw systemwide sales rise 14% year over year in the second quarter. After filtering through Wingstop's franchisee operations, the company's revenue increased 12% to $174.3 million. Adjusted earnings per diluted share inched up from $0.93 to $1. Your average Wall Street analyst would have settled for earnings near $0.87 per share on revenue in the neighborhood of $173.4 million.

Building new stores and refreshing the old ones

Wingstop's management argued that the company's store network expansion is working. Wingstop opened 129 net new locations in the second quarter, and intends to continue this "record pace" for the foreseeable future. The total store network now stands at 2,818 locations.

It's not all roses and chicken tenders, though. Same-store sales fell 1.9%, reflecting tight consumer budgets in this unpredictable economy. However, there's a fix on the way.

Wingstop has been testing a new operating model in its company-owned stores, demonstrating shorter ticket completion times and robust same-store growth in the test kitchens. The Wingstop Smart Kitchen solution is rolling out to franchised locations over the next few quarters, with about 1,000 conversions already completed.

Keep an eye on Wingstop's same-store growth to monitor the impact of this data-driven operating model.

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Anders Bylund has no position in any of the stocks mentioned. The Motley Fool recommends Wingstop. The Motley Fool has a disclosure policy.