Here's Why Wingstop Stock Flew to an All-Time High Today

What happened

Shares of restaurant chain Wingstop (WING 2.81%) flew to an all-time high today after the company reported financial results for the first quarter of 2023. As of 3:36 p.m. ET, Wingstop stock was up 10% for the day and had briefly surpassed a price per share of $221. 

So what

Wingstop has company-operated restaurants in the U.S. as well as franchised locations both domestically and internationally. In Q1, systemwide sales (which includes both company-operated and franchised locations) were up a whopping 30% year over year. And for what it's worth, this wasn't an easy year-over-year comparison -- systemwide sales were up 13% in the same quarter of last year.

The systemwide-sales growth was impressive enough. But perhaps even more impressive was Wingstop's same-store-sales growth. After a location has been open for one year, it's added to the same-store base and management tracks sales at those locations over time.

Same-store sales have increased for Wingstop every year for 19 years at U.S. locations. And in Q1, the company had domestic same-store-sales growth of 20.1%, putting it on pace for a 20th consecutive year. And according to management, this growth in Q1 was driven by transactions, not price increases. It shows the incredible and growing popularity of the Wingstop brand and it's why this restaurant stock hit an all-time high today.

Now what

As of the end of Q1, Wingstop had nearly 2,000 locations worldwide and management expects to open roughly 200 more locations before the end of 2023. It also expects ongoing same-store-sales growth. And these two factors should drive meaningful revenue growth for the year.

If you're looking for a business that consistently performs well, then Wingstop should be at the top of your list. However, if you're looking for a bargain stock, I doubt Wingstop would even make the list. With today's gains, the stock trades trades at a price-to-earnings (P/E) ratio of about 110, compared to an average P/E ratio of closer to 20 for the S&P 500.

Wingstop's business is performing perhaps better than any other restaurant on the stock market. But the investment does have valuation risk today for investors to be aware of.