Mister Car Wash has gotten torched over the last six months - since March 2025, its stock price has dropped 32.5% to $5.48 per share. This was partly due to its softer quarterly results and might have investors contemplating their next move.
Is now the time to buy Mister Car Wash, or should you be careful about including it in your portfolio? Get the full breakdown from our expert analysts, it’s free.
Why Do We Think Mister Car Wash Will Underperform?
Even with the cheaper entry price, we don't have much confidence in Mister Car Wash. Here are three reasons why MCW doesn't excite us and a stock we'd rather own.
1. Same-Store Sales Falling Behind Peers
In addition to reported revenue, same-store sales are a useful data point for analyzing Specialized Consumer Services companies. This metric measures the change in sales at brick-and-mortar locations that have existed for at least a year, giving visibility into Mister Car Wash’s underlying demand characteristics.
Over the last two years, Mister Car Wash’s same-store sales averaged 2.7% year-on-year growth. This performance was underwhelming and suggests it might have to change its strategy or pricing, which can disrupt operations. 
2. Cash Burn Ignites Concerns
Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.
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 8.7%, meaning it lit $8.71 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.
3. Short Cash Runway Exposes Shareholders to Potential Dilution
As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.
Mister Car Wash burned through $15.98 million of cash over the last year, and its $1.79 billion of debt exceeds the $26.41 million of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble.
Unless the Mister Car Wash’s fundamentals change quickly, it might find itself in a position where it must raise capital from investors to continue operating. Whether that would be favorable is unclear because dilution is a headwind for shareholder returns.
We remain cautious of Mister Car Wash until it generates consistent free cash flow or any of its announced financing plans materialize on its balance sheet.
Final Judgment
Mister Car Wash falls short of our quality standards. Following the recent decline, the stock trades at 11.6× forward P/E (or $5.48 per share). While this valuation is reasonable, we don’t see a big opportunity at the moment. There are more exciting stocks to buy at the moment. We’d suggest looking at a fast-growing restaurant franchise with an A+ ranch dressing sauce.
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