Restaurant stocks saw early action Wednesday as first-quarter surprises, and mergers and acquisitions, spurred some heavy trading.
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Wingstop (WING) jumped on strong first-quarter earnings and its full-year outlook.
The Addison, Texas-based chain easily outpaced FactSet analyst consensus for both earnings and sales growth. Year over year, the restaurant operator reported a 74% earnings rebound to 59 cents. Revenue increased 43% to $108.7 million.
Wingstop, which operates in 44 states, also reported that domestic same-store sales grew 20.1% during the quarter. Its digital sales reached 65.2% of overall sales, a record.
For 2023, Wingstop’s updated guidance now includes “high single-digit” domestic same-store-sales growth in 2023. Analysts expected 6.2%, FactSet shows.
WING stock popped 5% to 209.36 in choppy trade on the stock market today. The move saw it climb above the 5% buy zone from a recent breakout past 193.84.
Restaurant Stocks: Darden Gobbles Up Ruth’s Chris
Also on Wednesday, Olive Garden and Red Lobster owner Darden Restaurants (DRI) announced it will buy Ruth’s Hospitality Group (RUTH), which operates its namesake steakhouse chain, for $715 million in an all-cash transaction.
The deal values the Ruth’s chain, based in Winter Park, Fla., at $21.50 per share, 34% above Tuesday’s closing price.
RUTH stock soared 33.3% early Wednesday, to 21.37, a 12-month high. DRI stock eased 0.5% to 151.03.
Among other restaurant stocks, Yum Brands (YUM), which runs the KFC and Pizza Hut chains, missed Q1 earnings estimates. The restaurant operator posted a 1% EPS rebound to $1.06. Sales gained 5% to $1.624 billion. Analysts were expecting EPS of $1.13, FactSet shows.
But its spinoff, Yum China (YUMC), crushed Q1 earnings views. The holding company posted a 186% EPS rebound to 69 cents. Sales increased 9% to $2.917 billion. Analysts had forecast EPS of 46 cents.
YUM stock fell 2.2% to 139.76, falling back in the buy zone from a recent breakout past 133.87.
YUMC stock edged up 0.2% to 61.86, as it attempts to rebound from support at its 10-week/50-day moving average.
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