European Wax Center, Inc. (NASDAQ:EWCZ) Just Reported Yearly Earnings: Have Analysts Changed Their Mind On The Stock?
Investors in European Wax Center, Inc. (NASDAQ:EWCZ) had a good week, as its shares rose 2.5% to close at US$14.51 following the release of its annual results. It was an okay report, and revenues came in at US$221m, approximately in line with analyst estimates leading up to the results announcement. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
View 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$230.5m in 2024. This reflects an okay 4.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to soar 60% to US$0.29. Before this earnings report, the analysts had been forecasting revenues of US$233.9m and earnings per share (EPS) of US$0.34 in 2024. So there's definitely been a decline in sentiment after the latest results, noting the real cut to new EPS forecasts.
It might be a surprise to learn that the consensus price target was broadly unchanged at US$18.00, with the analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic European Wax Center analyst has a price target of US$23.00 per share, while the most pessimistic values it at US$15.00. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. We would highlight that European Wax Center's revenue growth is expected to slow, with the forecast 4.3% annualised growth rate until the end of 2024 being well below the historical 21% p.a. growth over the last three years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% per year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than European Wax Center.
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. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that European Wax Center's revenue is expected to perform worse than the wider 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.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have estimates - from multiple European Wax Center analysts - going out to 2026, and you can see them free on our platform here.
And what about risks? Every company has them, and we've spotted 1 warning sign for European Wax Center you should know about.
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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.
