EWCZ - Is European Wax Center Stock a Buy in 2023?
After the stock market wipeout in 2022, investors are sifting through the wreckage for quality investments trading at discounts from their previous highs. Is European Wax Center (NASDAQ: EWCZ) one such example? Let's discuss whether the company's efforts to consolidate the fragmented hair-removal industry should earn it a spot in your portfolio.
Founded in 2004 and hitting public markets in 2021, European Wax Center is a small-cap personal-hygiene company that focuses on hair removal. The company disrupts this relatively mature industry by supplanting the traditional independent salon with its franchise business model. And while it isn't America's only hair-removal chain, it is the largest -- its employees performed more than 20 million waxing services in 2021.
The U.S. hair-removal industry isn't known for its lightning-fast growth. According to management, the opportunity (which includes razors and in-home hair-removal solutions) expanded at a compound annual growth rate (CAGR) of just 3% between 2015 and 2019 (out-of-home waxing services grew by 8%). European Wax Centers' growth strategy will depend on differentiating its service from mom-and-pop waxing salons and more expensive options such as laser hair removal.
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Is European Wax Center Stock a Buy in 2023?