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Each week we run a DCF (Discounted Cash Flow) model on a company from our watchlist. This week’s pick: Wingstop Inc. (WING).
 

Profile

Wingstop is a fast-growing global quick-service restaurant brand specializing in chicken wings, fries, and sauces, operating a highly franchised system across the U.S. and international markets. The company’s business model is anchored by franchise royalties, development fees, advertising contributions, and a rapidly expanding digital ordering ecosystem.

Wingstop’s heavy franchise mix delivers a capital-light operating structure, allowing for efficient unit growth and elevated returns on invested capital. Its digital platform, menu standardization, and strong brand positioning support scalable expansion, pricing flexibility, and consistent cash generation relative to traditional restaurant models.
 

DCF Analysis

Inputs:

Discount Rate: 10%
Terminal Growth Rate: 3%
WACC: 10%

Forecasted Free Cash Flows (in billions USD)

2025: $0.07 → PV: $0.06
2026: $0.08 → PV: $0.06
2027: $0.09 → PV: $0.06
2028: $0.10 → PV: $0.06
2029: $0.11 → PV: $0.05

Total Present Value of FCFs = $0.29B

Terminal Value Calculation

Using perpetuity growth model with 2029 FCF = $0.11B:

TV = (0.11 × 1.03) ÷ (0.10 − 0.03) = $1.62B
Present Value of Terminal Value = $1.01B

Enterprise Value

Enterprise Value = 0.29B + 1.01B = $1.30B

Net Debt

Cash & Equivalents: $0.27B
Total Debt: $1.27B
Net Debt = $1.00B

Equity Value & Per-Share Value

Equity Value = 1.30B – 1.00B = $0.30B
Shares Outstanding: ~0.028B
Intrinsic Value per Share ≈ $11

Conclusion

DCF Value: $11
Current Price: ~$285
Margin of Safety: –95%

Wingstop continues to execute one of the most compelling unit growth models in the quick-service restaurant space, leveraging an asset-light franchise structure, strong category demand, and digital ordering adoption to drive systemwide sales and free cash flow growth. Its disciplined capital allocation and scalable economics have supported sustained expansion and premium investor sentiment.

However, under conservative DCF assumptions, WING trades materially above intrinsic value, reflecting a growth-premium multiple typically reserved for high-velocity expansion models. While Wingstop remains a differentiated and high-quality brand with substantial long-run unit growth potential, current valuations imply a significant premium with limited margin of safety for value-oriented investors.

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