Investing.com -- WingStop has been added to the Wedbush Best Ideas List, with the firm forecasting strong growth potential for the company in 2025.
According to Wedbush analysts, WingStop is "well-positioned to deliver MSD SSS growth in 2025," citing a variety of factors that support this outlook.
The company's "attractive value proposition/perception" and marketing initiatives are key drivers behind its expected growth.
They added that WingStop is set to continue increasing its marketing spend by 20% or more, helping to close a "10%+ awareness gap vs. more mature QSR peers."
The investment is expected to strengthen WingStop's brand presence and attract a larger customer base.
Digital growth is another critical component of WingStop's strategy, according to Wedbush, which noted a current digital mix of 69%.
The firm’s analysts highlight opportunities for "hyper-personalization" and efforts to boost "retention and frequency" of both new and existing customers.
Notably, the chicken sandwich is said to have has been a major success, driving "record levels of new guests and retention rates" in Q3.
In addition, WingStop's menu innovation, with 2-3 new flavors annually, and the potential for growth in its lesser-known Tenders segment are expected to further enhance its future prospects.
Wedbush also notes that WingStop’s system sales growth has been impressive, with SSS growth of ~20% in 2024 and ~18% in 2023.
While there are some concerns among investors, Wedbush believes that the current expectations for 2025 SSS growth are "overly conservative."
Despite its current EV/EBITDA ratio of 35.8x, Wedbush analysts find WingStop's valuation attractive, particularly when compared to peers like Domino’s, Yum! Brands (NYSE:YUM), and McDonald's (NYSE:MCD), which typically command higher multiples.
