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Conveyorized car wash service company Mister Car Wash (NYSE:MCW) reported results in line with analysts' expectations in Q4 FY2023, with revenue up 7.4% year on year to $230.1 million. On the other hand, the company's full-year revenue guidance of $1.00 billion at the midpoint came in 1.4% below analysts' estimates. It made a non-GAAP profit of $0.07 per share, down from its profit of $0.08 per share in the same quarter last year.
Is now the time to buy Mister Car Wash? Find out by reading the original article on StockStory.
Mister Car Wash (MCW) Q4 FY2023 Highlights:
- Revenue: $230.1 million vs analyst estimates of $230.4 million (small miss)
- EPS (non-GAAP): $0.07 vs analyst estimates of $0.07 (3.5% beat)
- Management's revenue guidance for the upcoming financial year 2024 is $1.00 billion at the midpoint, missing analyst estimates by 1.4% and implying 8.1% growth (vs 5.8% in FY2023)
- Free Cash Flow was -$70.27 million compared to -$42.46 million in the previous quarter
- Gross Margin (GAAP): 29.4%, down from 32.8% in the same quarter last year
- Same-Store Sales were up 0.7% year on year (miss vs. expectations of up 1.6% year on year)
- Market Capitalization: $2.83 billion
Formerly known as Hotshine Holdings, Mister Car Wash (NYSE:MCW) offers car washes across the United States through its conveyorized service.
Specialized Consumer ServicesSome consumer discretionary companies don’t fall neatly into a category because their products or services are unique. Although their offerings may be niche, these companies have often found more efficient or technology-enabled ways of doing or selling something that has existed for a while. Technology can be a double-edged sword, though, as it may lower the barriers to entry for new competitors and allow them to do serve customers better.
Sales GrowthA company's long-term performance can indicate its business quality. Any business can enjoy short-lived success, but best-in-class ones sustain growth over many years. Mister Car Wash's annualized revenue growth rate of 10.2% over the last four years was mediocre for a consumer discretionary business. Within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends. That's why we also follow short-term performance. Mister Car Wash's annualized revenue growth of 10.6% over the last two years aligns with its four-year revenue growth, suggesting the company's demand has been stable.
We can better understand the company's revenue dynamics by analyzing its same-store sales, which show how much revenue its established locations generate. Over the last two years, Mister Car Wash's same-store sales averaged 2.7% year-on-year growth. Because this number is lower than its revenue growth, we can see the company's sales are benefitting from the opening of new locations.
This quarter, Mister Car Wash grew its revenue by 7.4% year on year, and its $230.1 million of revenue was in line with Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 9.9% over the next 12 months, an acceleration from this quarter.
Cash Is KingIf you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Over the last two years, Mister Car Wash's demanding reinvestments to stay relevant with consumers have drained company resources. Its free cash flow margin has been among the worst in the consumer discretionary sector, averaging negative 4.8%.
Mister Car Wash burned through $70.27 million of cash in Q4, equivalent to a negative 30.5% margin, reducing its cash burn by 343% year on year.
Key Takeaways from Mister Car Wash's Q4 Results It was encouraging to see Mister Car Wash slightly top analysts' EPS expectations this quarter despite a same store sales and revenue miss. A key negative was that the company's full-year earnings forecast missed and its operating margin fell short of Wall Street's estimates. Overall, this was a mixed quarter for Mister Car Wash with the weak outlook likely to weigh on shares. The company is down 1.8% on the results and currently trades at $8.55 per share.
