Stephens & Co. Raises Mister Car Wash Rating to Overweight, Adjusts Price Target to $6.25
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- Investment Foundation: NNN REIT focuses on single-tenant properties, primarily investing in retail and service sectors with nearly 3,700 properties across 50 states, ensuring a stable income stream and low volatility, thereby enhancing investor confidence.
- High Dividend Yield: Currently, NNN REIT offers a dividend yield exceeding 5.5%, significantly higher than the REIT sector average of 4.4% and the S&P 500's 1.1%, making it a preferred choice for passive income investors and further enhancing its investment appeal.
- Financial Stability: NNN REIT holds a BBB+/Baa1 bond rating with a weighted average debt maturity of 10.7 years and $1.4 billion in liquidity, showcasing strong financial flexibility that supports future investments and dividend growth.
- Sustained Growth Potential: The company plans to invest $850 million to $950 million in the coming years, aiming to partially finance this through $170 million to $200 million in property sales, supporting mid-single-digit annual earnings per share growth and ensuring continued dividend increases.
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Financial Performance: Mister Car Wash reported a 6% revenue increase to $263 million and a 10% rise in adjusted EBITDA to $87 million in Q3 2025, with a notable 3.1% growth in comparable store sales for the tenth consecutive quarter.
Strategic Expansion: The company acquired five stores in Lubbock, Texas, and plans to open approximately 30 new locations this year, aiming for over 1,000 stores nationwide in the long term.
Membership Growth: UWC membership increased by 6% year-over-year, reaching about 2.2 million members, with the Titanium 360 tier achieving 25% penetration of the total membership base.
Market Outlook: Management remains optimistic about future growth despite challenges in retail performance, particularly in lower-income demographics, and is focused on maximizing revenue per member through strategic marketing and operational excellence.
Earnings Performance: Mister Car Wash, Inc. reported a profit of $27.41 million for Q3, up from $22.34 million last year, exceeding analysts' expectations of $0.10 per share with an actual EPS of $0.08.
Adjusted Earnings: Excluding special items, the company posted adjusted earnings of $36.44 million or $0.11 per share for the quarter.
Revenue Growth: The company's revenue increased by 5.7% to $263.42 million compared to $249.33 million in the same quarter last year.
Future Guidance: Mister Car Wash provided full-year EPS guidance of $0.42 - $0.43 and revenue guidance between $1.046 billion and $1.054 billion.

Price Increase Impact: Mister Car Wash raised its basic Unlimited Car Wash price, which is expected to positively affect average membership prices in Q4 and support the company's performance for the rest of the year.
Analyst Upgrade: Analyst Thomas Wendler upgraded Mister Car Wash to Overweight from Equalweight, citing an attractive entry point despite a 28% stock decline over the past six months, while lowering the price target by 17%.
Growth Opportunities: Wendler believes that the company's unit growth potential and improved retail traffic outweigh current headwinds, with a focus on enhancing the value-to-price ratio and developing new products/services.
Market Reaction: Following the upgrade, Mister Car Wash shares experienced a 2% increase on Monday, reflecting positive investor sentiment.

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