| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 30.80 | 684 |
| Intrinsic value (DCF) | 2.48 | -37 |
| Graham-Dodd Method | 1.40 | -64 |
| Graham Formula | 1.43 | -64 |
European Wax Center, Inc. (NASDAQ: EWCZ) is a leading franchisor and operator of out-of-home waxing services in the U.S., specializing in body and facial waxing treatments. Founded in 2004 and headquartered in Plano, Texas, the company operates a network of 874 centers across 44 states, with 868 franchised and six corporate-owned locations as of March 2022. European Wax Center differentiates itself through its proprietary Comfort Wax® formula and a comprehensive suite of pre- and post-service skincare products, including ingrown hair serums and exfoliating gels. Positioned in the Consumer Defensive sector under Household & Personal Products, EWCZ capitalizes on the growing demand for personal grooming services, benefiting from recurring revenue streams via its franchise model and retail product sales. The company’s asset-light franchising strategy ensures scalability while maintaining strong brand consistency across its nationwide footprint.
European Wax Center presents a compelling investment case due to its asset-light franchise model, strong brand recognition, and recurring revenue from both services and retail products. The company’s high-margin skincare products complement its core waxing services, enhancing customer lifetime value. However, risks include exposure to discretionary consumer spending (beta of 1.28), reliance on franchisee performance, and elevated debt levels ($380.8M). With a market cap of ~$223M and positive operating cash flow ($56.5M in FY2025), EWCZ is well-positioned for unit growth, but macroeconomic pressures could impact same-store sales. The lack of dividends may deter income-focused investors.
European Wax Center’s competitive advantage lies in its specialized focus on waxing services, a niche with limited national competitors. Its proprietary Comfort Wax® technology reduces pain compared to traditional methods, fostering customer loyalty. The franchise model enables rapid expansion with minimal capital expenditure, while company-owned locations serve as showcases for operational best practices. EWCZ’s vertically integrated product line (e.g., ingrown hair serums) creates additional high-margin revenue streams and differentiates it from generic salon services. However, the company faces indirect competition from at-home waxing products (e.g., Sally Hansen) and full-service beauty salons offering waxing as an add-on. Its premium pricing may limit appeal in cost-sensitive markets, and regional waxing chains could erode local market share. The lack of diversified beauty services (e.g., threading or laser hair removal) may also constrain addressable market growth compared to broader competitors.