William Blair initiated research coverage of Mister Car Wash, Inc. (MCW $14.55), the largest car wash brand in the United States, with approximately 400 sites.
Analyst Ryan Sundby estimates the company to generate revenue of $855.0 million in 2022 and $955.0 million in 2023. Attaining management’s goal of more than 1,000 units, which Sundby views as achievable (just 10% of current industry locations), would translate to roughly $1.7 billion in sales and more than $600 million in adjusted EBITDA over time.
“Mister Car Wash is the leader in the $12 billion U.S. car wash market,” Sundby said, “an industry that has grown and is expected to continue to grow at a midsingle-digit rate. The market is also highly fragmented, as 85% of locations are owned by operators with four or fewer sites, and Mister Car Wash accounts for less than 5% of the market. Industry growth has benefited from a shift to more efficient do-it-for-me services, as consumers increasingly favor speed, quality, and convenience. As the largest car wash brand in the United States, Mister Car Wash features a range of proprietary products, processes, advanced technology, and support functions that less sophisticated operators are challenged to match. The company’s membership program also helps drive customer loyalty and brand awareness, while delivering a predictable, recurring revenue stream.”
Sundby continued, “Prior to the pandemic, Mister Car Wash had achieved 39 consecutive quarters of positive comparable store sales growth, averaging 9%. It has also grown its active member base from 36,000 in 2010 to 1.56 million today, while expanding from 65 locations to more than 390 today—equating to midteens compound annual growth. Looking forward, the company expects to nearly triple its unit count to more than 1,000 locations through a combination of greenfield additions and opportunistic acquisitions.”
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Current Ratings Distribution (as of 3/15/22)
Outperform (Buy): 77%
Market Perform (Hold): 23%
Underperform (Sell): 1%
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Outperform (Buy): 29%
Market Perform (Hold): 5%
Underperform (Sell): 0%
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