Mister Car Wash (MCW)

Conveyorized car wash service company Mister Car Wash (NYSE:MCW) reported Q3 CY2025 results beating Wall Street’s revenue expectations, with sales up 5.7% year on year to $263.4 million. The company expects the full year’s revenue to be around $1.05 billion, close to analysts’ estimates. Its non-GAAP profit of $0.11 per share was in line with analysts’ consensus estimates.

Company Overview

Formerly known as Hotshine Holdings, Mister Car Wash (NYSE:MCW) offers car washes across the United States through its conveyorized service.

Some consumer discretionary companies don’t fall neatly into a category because their products or services are unique. Although their offerings may be niche, these companies have often found more efficient or technology-enabled ways of doing or selling something that has existed for a while. Technology can be a double-edged sword, though, as it may lower the barriers to entry for new competitors and allow them to do serve customers better.

Competitors offering conveyorized car washes and detailing services include private companies Autobell Car Wash, Zips Car Wash, and Wash Depot Holdings.

Reviewing a company’s long-term sales performance reveals insights into its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Over the last five years, Mister Car Wash grew its sales at a 12.8% annual rate. Although this growth is acceptable on an absolute basis, it fell short of our standards for the consumer discretionary sector, which enjoys a number of secular tailwinds.

Long-term growth is the most important, but within consumer discretionary, product cycles are short and revenue can be hit-driven due to rapidly changing trends and consumer preferences. Mister Car Wash’s recent performance shows its demand has slowed as its annualized revenue growth of 6.9% over the last two years was below its five-year trend.

We can better understand the company’s revenue dynamics by analyzing its same-store sales, which show how much revenue its established locations generate. Over the last two years, Mister Car Wash’s same-store sales averaged 2.9% year-on-year growth. Because this number is lower than its revenue growth, we can see the opening of new locations is boosting the company’s top-line performance.

This quarter, Mister Car Wash reported year-on-year revenue growth of 5.7%, and its $263.4 million of revenue exceeded Wall Street’s estimates by 0.9%.

Looking ahead, sell-side analysts expect revenue to grow 5.6% over the next 12 months, similar to its two-year rate. This projection is underwhelming and implies its products and services will see some demand headwinds.

Operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies with different levels of debt and tax rates because it excludes interest and taxes.

Mister Car Wash’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 18.6% over the last two years. This profitability was top-notch for a consumer discretionary business, showing it’s an well-run company with an efficient cost structure.

In Q3, Mister Car Wash generated an operating margin profit margin of 19.7%, in line with the same quarter last year. This indicates the company’s overall cost structure has been relatively stable.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Mister Car Wash’s full-year EPS dropped 13.2%, or 3.1% annually, over the last four years. We tend to steer our readers away from companies with falling revenue and EPS, where diminishing earnings could imply changing secular trends and preferences. Consumer Discretionary companies are particularly exposed to this, and if the tide turns unexpectedly, Mister Car Wash’s low margin of safety could leave its stock price susceptible to large downswings.

In Q3, Mister Car Wash reported adjusted EPS of $0.11, up from $0.09 in the same quarter last year. This print beat analysts’ estimates by 7.4%. Over the next 12 months, Wall Street expects Mister Car Wash’s full-year EPS of $0.42 to grow 11.2%.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

While Mister Car Wash posted positive free cash flow this quarter, the broader story hasn’t been so clean. Over the last two years, Mister Car Wash’s demanding reinvestments to stay relevant have drained its resources, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 5.2%, meaning it lit $5.19 of cash on fire for every $100 in revenue. This is a stark contrast from its operating margin, and its investments in working capital/capital expenditures are the primary culprit.

Mister Car Wash’s free cash flow clocked in at $25.81 million in Q3, equivalent to a 9.8% margin. Its cash flow turned positive after being negative in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, leading to temporary swings. Long-term trends carry greater meaning.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Mister Car Wash historically did a mediocre job investing in profitable growth initiatives. Its five-year average ROIC was 6.2%, somewhat low compared to the best consumer discretionary companies that consistently pump out 25%+.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Fortunately, Mister Car Wash’s ROIC averaged 3.5 percentage point increases over the last few years. This is a good sign, and we hope the company can continue improving.

Debt is a tool that can boost company returns but presents risks if used irresponsibly. As long-term investors, we aim to avoid companies taking excessive advantage of this instrument because it could lead to insolvency.

Mister Car Wash’s $1.76 billion of debt exceeds the $35.65 million of cash on its balance sheet. Furthermore, its 5× net-debt-to-EBITDA ratio (based on its EBITDA of $337.8 million over the last 12 months) shows the company is overleveraged.

At this level of debt, incremental borrowing becomes increasingly expensive and credit agencies could downgrade the company’s rating if profitability falls. Mister Car Wash could also be backed into a corner if the market turns unexpectedly – a situation we seek to avoid as investors in high-quality companies.

We hope Mister Car Wash can improve its balance sheet and remain cautious until it increases its profitability or pays down its debt.

We enjoyed seeing Mister Car Wash beat analysts’ same-store sales, revenue, and EPS expectations this quarter. We were also glad its full-year EPS guidance slightly topped Wall Street’s estimates. Overall, this print had some key positives. The stock traded up 11.5% to $5.82 immediately following the results.

Updated: December 4, 2025 at 9:05 PM EST

Before making an investment decision, investors should account for Mister Car Wash’s business fundamentals and valuation in addition to what happened in the latest quarter.

We see the value of companies helping consumers, but in the case of Mister Car Wash, we’re out. First off, its revenue growth was weak over the last five years, and analysts expect its demand to deteriorate over the next 12 months. On top of that, Mister Car Wash’s same-store sales performance has disappointed, and its declining EPS over the last four years makes it a less attractive asset to the public markets.

Mister Car Wash’s P/E ratio based on the next 12 months is 11.4x. This valuation is reasonable, but the company’s shaky fundamentals present too much downside risk. There are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $7.48 on the company (compared to the current share price of $5.24).

Although the price target is bullish, readers should exercise caution because analysts tend to be overly optimistic. The firms they work for, often big banks, have relationships with companies that extend into fundraising, M&A advisory, and other rewarding business lines. As a result, they typically hesitate to say bad things for fear they will lose out. We at StockStory do not suffer from such conflicts of interest, so we’ll always tell it like it is.