Wingstop stock flew nearly 25% higher Wednesday morning, after the chicken-wings restaurant chain beat second-quarter expectations. Meanwhile, Starbucks fell after a mixed quarterly report.
Wingstop early Thursday announced a 12% rise in sales to $174.3 million as adjusted earnings climbed 14.3% to $59.2 million. Analysts had expected sales of $173.7 million on EPS of 87 cents, according to FactSet. Same-store sales fell 1.9%, although franchise fee revenues rose thanks to more new locations.
The company reiterated its forecast for 1% domestic same-store sales growth.
Expansion continued at a bullish pace, as Wingstop opened 129 net new units for a 19.8% increase year over year. The company now counts 2,818 restaurants, and raised its planned growth rate to 17% to 18% from a previous plan for 16% to 17% growth.
"We continue to open new restaurants at a record pace, demonstrating our brand partners' commitment to growing the Wingstop brand, furthering us toward our vision of becoming a Top 10 Global Restaurant Brand," CEO Michael Skipworth said in the earnings release.
The company also raised its quarterly dividend from 27 cents to 30 cents a share. The new dividend will be paid Sept. 5 to stockholders of record as of Aug. 15. That brings the annualized dividend yield to 0.3%.
Wingstop Stock Rallies
Wingstop stock gapped up to a gain of more than 25% Wednesday, overtaking its 50-day moving average in heavy volume. The stock broke out above a trendline connecting the daily highs since June 11. That makes the stock actionable.
The Relative Strength Rating remains low (42), after the stock lost more than half its value from its peak last September to a low in April. Shares are up 26% year to date.
Wingstop has a weak 62 Composite Rating, although its EPS Rating of 92 is one of the highest in the restaurant industry group.
The stock has a 21-day average true range (ATR) of 3.37%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
Starbucks Falls After Earnings
Among other restaurant stocks, Starbucks reversed lower as it met resistance around its 200-day moving average. SBUX stock climbed as much as 6.4% at the open but quickly faded, bobbing between narrow gains and losses.
Starbucks late Tuesday reported earnings of 50 cents a share, a 46% plunge from the year-ago period. The profit missed analysts' expectations for 65 cents, according to FactSet. Sales of $9.465 billion rose 4% and surpassed estimates for $9.294.
The company plans to eliminate stores that only accept mobile orders, saying that format doesn't fit with Starbucks' new strategy of building a brand around the customer experience in its coffee houses. The company currently has around 80 to 90 locations that don't offer seating.
Starbucks said it is making progress with its "Back to Starbucks" strategy launched by CEO Brian Niccol, who took the helm last year. The stock is up less than 2% year to date, lagging the broad market as it battles growing competition, tariffs and other difficulties.
Analysts responded favorably to the quarterly report. Wells Fargo, Morgan Stanley, JPMorgan and others raised their price targets.
"Despite elevated investments and depressed earnings, we recognize the power of potentially sizable (same store sales) growth and a streamlined cost structure over the coming years," UBS analyst Dennis Geiger said in a note to clients. "But multiyear earnings visibility remains limited in the absence of details into investment/cost savings targets … ." Geiger raised the price target to 100 from 95 with a neutral rating.
SBUX stock has a Composite Rating of 48 and ATR of 2,47%.
Cheesecake Factory Climbs
Meanwhile, Cheesecake Factory rose 4.5% Wednesday morning, trading near all-time highs after beating views. The stock is extended from the 56.26 buy point of a cup-with-handle base.
Cheesecake Factory's sales and EPS rose 6%. Same-restaurant sales rose 1.2% year-over-year. The company has opened 16 locations in the first half of 2025 and plans for a total of 25 for the full year.
The stock has a 94 Composite Rating and an ATR of 3.13%.
