Why Wingstop Stock Dropped 21% Last Month
Shares of restaurant company (NASDAQ: WING) dropped 21.2% in February, according to data provided by S&P Global Market Intelligence. On Feb. 19, the company reported its financial results for the fourth quarter of 2024, capping off its 21st consecutive year of same-store sales growth, which is a spectacular achievement. It expects to report its 22nd consecutive year of gains in 2025.
However, Wingstop's accomplishment is clouded by a clear deceleration trend in its growth rate. In 2023, the company's same-store sales in the U.S. were up by 18%. This was followed by an additional 20% gain in 2024. But in 2025, management only expects to grow same-store sales at a low to mid-single-digit rate.
Wingstop is on pace for a major accomplishment. But the sharp drop in the growth rate concerns investors. For context, Wingstop stock is routinely one of the most expensive restaurant stocks around -- it still trades at a pricey valuation of over 60 times earnings, even after dropping 21% in February. Unfortunately for shareholders, lofty valuations often contract when growth slows.
Source Fool.com
