3 Reasons to Be Wary of Wingstop

Wingstop (NASDAQ: WING) has seen its share price soar in the last five years since its IPO, more than tripling from $30 per share in its first days of trading to over $90 as of this writing. The chicken wing specialist, whose mission is to "serve the world flavor," has set its sights to become a top 10 global restaurant brand. The company's expansion has been swift -- at the end of 2018, it had a total of 1,252 restaurants. By the end of 2019, the company had 1,385 locations, good for a 10% increase in total store count in just a year's time.

Domestic same-store sales growth for the fiscal fourth quarter hit 11.1%, significantly better than same-store sales growth of 6.0% in the prior-year period. Preliminary results put full-year revenue growth at 20.1% year over year. For the first nine months of the year, the company enjoyed growth in both royalty revenue (around 98% of Wingstop's restaurants are owned and operated by independent franchisees) and company-owned restaurant sales, but net income for the period fell 9.7%.

Though growth has been stellar for Wingstop thus far, here are three reasons for investors to be wary.

Source Fool.com