What happened
Shares of Wingstop (WING 2.12%) fell 14.9% in October, according to data provided by S&P Global Market Intelligence. This follows a 16% decline in September, and the stock is now down around 28% from all-time highs achieved back in August. As bad as that sounds, Wingstop stock is still up over 40% year to date and beating the market.
So what
Wingstop has been a rare restaurant winner during the coronavirus pandemic, boosted by its strong takeout operations. Sales have soared because it's a good dining option for observing physical distancing. In the recently reported third quarter, systemwide sales went up almost 33% year over year. A full 62% of sales came through digital channels, which primarily result in to-go orders. So this is a case where a restaurant is becoming more relevant without its dining room.
Image source: Getty Images.
But this could create a tough comparison heading into 2021. Holding on to all the fresh pandemic-induced sales volume will be hard enough, let alone building on that. Therefore, same-store sales could be down in 2021, and it's why a Wells Fargo analyst lowered its price target on Wingstop stock on Oct. 7, according to The Fly. This move likely contributed to this growth stock's decline in October.
Now what
Wingstop management continues to market the stock as a shareholder-friendly investment. Besides the ongoing quarterly dividend, the company just announced a huge special dividend of $5 per share. This will be the fourth special dividend it's declared since going public in 2015.
