Analysts Have Made A Financial Statement On European Wax Center, Inc.’s (NASDAQ:EWCZ) First-Quarter Report
Shareholders might have noticed that European Wax Center, Inc. (NASDAQ:EWCZ) filed its quarterly result this time last week. The early response was not positive, with shares down 9.8% to US$16.34 in the past week. It was an okay report, and revenues came in at US$50m, approximately in line with analyst estimates leading up to the results announcement. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there’s been a strong change in the company’s prospects, or if it’s business as usual. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
See our latest analysis for European Wax Center
Taking into account the latest results, the consensus forecast from European Wax Center’s nine analysts is for revenues of US$226.8m in 2023, which would reflect an okay 7.1% improvement in sales compared to the last 12 months. Statutory earnings per share are predicted to shoot up 160% to US$0.27. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$227.3m and earnings per share (EPS) of US$0.29 in 2023. So it looks like there’s been a small decline in overall sentiment after the recent results – there’s been no major change to revenue estimates, but the analysts did make a minor downgrade to their earnings per share forecasts.
The consensus price target held steady at US$21.63, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so – it could be handy to see how wide the range of underlying estimates is. The most optimistic European Wax Center analyst has a price target of US$27.00 per share, while the most pessimistic values it at US$17.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await European Wax Center shareholders.
One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. We would highlight that European Wax Center’s revenue growth is expected to slow, with the forecast 9.5% annualised growth rate until the end of 2023 being well below the historical 13% growth over the last year. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.4% annually. Factoring in the forecast slowdown in growth, it looks like European Wax Center is forecast to grow at about the same rate as the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for European Wax Center. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
With that said, the long-term trajectory of the company’s earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for European Wax Center going out to 2025, and you can see them free on our platform here..
Plus, you should also learn about the 2 warning signs we’ve spotted with European Wax Center (including 1 which is concerning) .
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Find out whether European Wax Center is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
