Was Jim Cramer Right About Wingstop (WING)?

In February 2025, Jim Cramer voiced skepticism about Wingstop (NASDAQ: WING), citing its underperformance and lack of clarity from leadership. The stock had plummeted 18% over the prior year, with steep drops in November 2024 and February 2025 following missed earnings and revenue targets. Yet by May 2025, Wingstop’s shares surged 14.5% after a strong Q1 earnings beat. Was Cramer’s criticism premature—or did the stock’s rebound validate his broader concerns? Let’s dissect the data.

Cramer’s Concerns: A Stock in Trouble

Cramer’s February 19, 2025, segment on Squawk on the Street framed Wingstop as a cautionary tale. The stock had lost 22% in November 2024 after Q3 profits of $25 million fell short of estimates. A further 13.4% drop in February 2025 followed a revenue miss, with $161.8 million falling below forecasts. Cramer questioned management’s ability to address these issues, ranking Wingstop 7th in his portfolio list but emphasizing his preference for AI stocks for faster returns.

At the time, institutional ownership had dipped to 36 hedge funds in Q4 2024, down from 39 in Q3—a sign of waning confidence. Cramer’s skepticism was rooted in two factors:
1. Operational Struggles: Missed earnings and weak revenue signals hinted at execution risks.
2. Valuation Pressures: Wingstop’s premium P/E ratio (then ~70) faced scrutiny amid slowing growth.

The Turnaround: Earnings Power and Expansion

By April 2025, Wingstop staged a comeback. Q1 results showed:
- Adjusted EPS of $0.99, beating estimates by $0.15.
- A record 126 net new global locations opened, pushing annual unit growth guidance to 16–17%.
- 72% of sales via digital platforms, reflecting tech-driven efficiency.

Analysts upgraded the stock to a “Moderate Buy”, with a price target of $320.05 (18.5% upside from May 2025 levels). The rebound was fueled by Wingstop’s asset-light franchise model, which allows rapid expansion without heavy capital outlays.

Data-Driven Analysis: Was Cramer Right?

Cramer’s criticism was prescient in highlighting Wingstop’s near-term risks but underestimated its long-term strengths:
1. Structural Resilience: Despite quarterly misses, Wingstop’s global expansion (18% growth in Q1) and digital sales dominance proved durable.
2. Valuation Justification: The $320 price target implies a forward P/E of ~60, still premium but aligned with its 16% annual unit growth rate.
3. Institutional Shift: While hedge funds reduced stakes in late 2024, the Q1 beat likely attracted new investors, as seen in the post-earnings rally.

Risks Remain, but the Bull Case Persists

Cramer’s warnings about management transparency and valuation still hold merit. Challenges include:
- Same-Store Sales: While expansion is strong, sustaining comparable sales growth in a competitive fast-food market is critical.
- Inflation: Rising costs could pressure margins, though franchising mitigates some risks.

However, Wingstop’s $191.3 million remaining share buyback authorization and plans for 600+ global locations by 2027 support a bullish narrative.

Conclusion: Cramer Was Half-Right

Jim Cramer’s February 2025 critique was valid in flagging Wingstop’s short-term struggles and valuation risks. However, his dismissal of the stock as a “slow-growth play” overlooked its scalable franchise model and global potential. The April 2025 earnings beat and subsequent analyst upgrades validate that Wingstop’s core strengths—digital innovation, franchising agility, and unit growth—can overcome periodic hiccups.

The data tells the story:
- Stock Performance: Despite the 18% decline before February 2025, Wingstop’s May 2025 price of $270.11 remained 32% above its 2023 low.
- Analyst Consensus: 22 analysts now rate it a “Moderate Buy,” a stark contrast to the skepticism Cramer highlighted.
- Growth Momentum: A 16–17% annual unit growth target, achievable through its proven franchisee partnerships, supports the $320 price target.

While Cramer’s concerns were justified in the short term, investors who held through the volatility—and bet on Wingstop’s long-term strategy—would have been rewarded. For now, the wings are flying higher.