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While Mister Car Wash, Inc. (NYSE:MCW) might not be the most widely known stock at the moment, it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$9.31 at one point, and dropping to the lows of US$8.03. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Mister Car Wash's current trading price of US$8.60 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Mister Car Wash’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Mister Car Wash
Is Mister Car Wash Still Cheap?
According to my price multiple model, which makes a comparison between the company's price-to-earnings ratio and the industry average, the stock price seems to be justfied. In this instance, I’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. I find that Mister Car Wash’s ratio of 26.92x is trading slightly above its industry peers’ ratio of 23.04x, which means if you buy Mister Car Wash today, you’d be paying a relatively reasonable price for it. And if you believe that Mister Car Wash should be trading at this level in the long run, then there should only be a fairly immaterial downside vs other industry peers. Is there another opportunity to buy low in the future? Since Mister Car Wash’s share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
What kind of growth will Mister Car Wash generate?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. However, with a relatively muted profit growth of 1.8% expected over the next year, growth doesn’t seem like a key driver for a buy decision for Mister Car Wash, at least in the short term.
What This Means For You
Are you a shareholder? MCW’s future growth appears to have been factored into the current share price, with shares trading around industry price multiples. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at MCW? Will you have enough conviction to buy should the price fluctuate below the industry PE ratio?