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European Wax Center, Inc. (NASDAQ:EWCZ) shareholders are probably feeling a little disappointed, since its shares fell 9.8% to US$16.34 in the week after its latest quarterly results. It was an okay result overall, with revenues coming in at US$50m, roughly what the analysts had been expecting. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on European Wax Center after the latest results.
Check out our latest analysis for European Wax Center
Taking into account the latest results, the current consensus from European Wax Center's nine analysts is for revenues of US$226.8m in 2023, which would reflect an okay 7.1% increase on its sales over the past 12 months. Statutory earnings per share are predicted to leap 160% to US$0.27. In the lead-up to this report, the analysts had been modelling 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. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. Currently, the most bullish analyst values European Wax Center at US$27.00 per share, while the most bearish prices it at US$17.00. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
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. It's pretty clear that there is an expectation that European Wax Center's revenue growth will slow down substantially, with revenues to the end of 2023 expected to display 9.5% growth on an annualised basis. This is compared to a historical growth rate of 13% over the past 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.