This Once-Hot Stock Is Now a Surprising Tax-Loss Selling Pick

Onetime market darling Wingstop has hit a speed bump. This stock soared 200% between the start of 2023 and its all-time high in September 2024 on stunning sales growth. As growth has slowed, however, Wingstop’s stock has tanked. While the company still boasts enviable unit economics and cash payback periods, we think the stock remains massively overvalued: Shares are trading 48% above our $186 fair value estimate. Wingstop is one of Morningstar Chief US Market Strategist Dave Sekera’s 6 Stocks to Sell Before the End of the Year; in fact, Sekera thinks it could be a possible tax-loss selling candidate for investors who picked up shares near their highs.

While we don’t expect Wingstop to achieve management’s goal of becoming a top-10 restaurant brand within a decade, we do see an enviable development runway for the chain and forecast midteens systemwide sales growth over that period. Our estimates are underpinned by best-in-class unit economics and a sizable development pipeline. We believe that management has a smart strategy, which prioritizes improving unit economics, driving brand awareness, and expanding into international markets. The company’s Smart Kitchen rollout aims to reduce ticket times, enabling shorter waits and improved capacity. Wingstop also plans to launch a more formalized and sophisticated loyalty program.

Key Morningstar Metrics for Wingstop

• Fair Value Estimate: $186
• Star Rating: 2 Stars
• Economic Moat Rating: Narrow
• Uncertainty Rating: High

Economic Moat Rating

Wingstop’s best-in-class unit economics, franchisees’ willingness to invest heavily in the brand, and comparable-store sales outperformance over the past half-decade attest to a durable brand intangible asset that results in our narrow moat rating. The company’s limited history and nascent international expansion, which so far have prevented a cost advantage, keep us from assigning a wide moat rating. Wingstop’s 30% average adjusted return on invested capital over the past five years handily exceeds our 8.1% cost of capital estimate.

Read more about Wingstop’s moat rating.

Fair Value Estimate for Wingstop Stock

Our $186 fair value estimate anticipates that comparable-store sales growth will return to the midsingle digits in 2026 and average 3.4% over the next five years. We expect average annual unit growth of 13% over the next five years. We estimate company-owned stores will generate 24%-25% restaurant-level margins in 2025 and see room for improvement to 26%-27% by 2029. We forecast a 29.2% adjusted operating margin in 2029, up from 26.3% in 2024, with modest incremental expansion a long-term possibility as the company scales. Our estimates for Wingstop include five-year compound annual growth rates of 18% for sales, 20% for adjusted operating profit, and 22% for diluted earnings per share.

Read more about Wingstop’s fair value estimate.

Risk and Uncertainty

Wingstop competes with other chains and independent restaurants for financing, lease terms, restaurant sites, qualified workers, and franchisees. It also competes with restaurants, grocers, and convenience stores for consumers’ spending on food. Wingstop remains moderately sensitive to consumer health. Input cost inflation remains a large concern for most operators after sharp increases in commodity and hourly labor costs. Much of our valuation is tied to the company’s development potential and ability to attract strong franchise partners. Concentration risk adds a degree of uncertainty, as more than half of Wingstop’s stores are in just three states.

Read more about Wingstop’s risk and uncertainty.

Wingstop Bulls Say

• Wingstop’s early success in the UK could bode well for expansion into large markets in continental Europe.
• With the ability to use more parts of the chicken across its menu, Wingstop should be able to stabilize food input costs for its franchisees and company-owned restaurants.
• A national marketing fee increase could help Wingstop narrow the brand recognition gap with its large, international peers, driving stronger traffic to its US stores, while kitchen technology upgrades should bolster throughput and enhance service times.

Wingstop Bears Say

• Flagging restaurant traffic industrywide could pose an increasing headwind into 2026.
• Fluctuations in bone-in wing costs could affect restaurant profitability, forcing the company to raise prices again.
• A concentrated menu could reduce Wingstop’s ability to reposition its fare if consumer preferences shift.

This article was compiled by Susan Dziubinski and Sylvia Hauser. Data as of Dec. 2, 2025, close unless otherwise noted.