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National Vision (EYE) Q2 Earnings Top Estimates, 2021 View Up

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National Vision Holdings Inc. (EYE - Free Report) delivered adjusted earnings per share (EPS) of 48 cents for the second quarter of 2021 as against the loss per share of 41 cents a year ago. The figure exceeded the Zacks Consensus Estimate by 108.7%.

The adjustment excludes the impact of certain non-recurring charges like asset impairment, amortization of acquisition intangibles and stock compensation expenses, among others.

GAAP EPS for the quarter was 42 cents, significantly improved from the loss per share of 55 cents in the year-earlier quarter.

Revenues in Detail

Revenues in the second quarter totaled $549.5 million, beating the Zacks Consensus Estimate by 11.1%. The top line improved 111.3% from the year-ago number. The company noted that net revenues were positively impacted by 16.5% due to the timing of unearned revenues.

In the second quarter, comparable store sales growth was 99.1% whereas adjusted comparable store sales growth was 76.7%.

National Vision Holdings, Inc. Price, Consensus and EPS Surprise

 

National Vision opened 20 new stores in second-quarter 2021 and closed one to reach 1,249 stores at the end of the quarter. Overall, store count grew 5.5% year over year.

Margins

Gross profit in the reported quarter was $313.5 million, up 162.9% from the prior-year quarter. Gross margin of 57.1% expanded 1121 basis points (bps).

Meanwhile, selling, general and administrative expenses increased 71.5% to $234.2 million. Adjusted operating margin was 14.4%, implying a 2111-bp expansion year over year.

Financial Position

National Vision exited the second quarter of 2021 with cash and cash equivalents of $408.3 million compared with $453.7 million at the end of the prior quarter.

Cumulative net cash flow from operating activities at the end of the second quarter was $189.8 million compared with $71.4 million a year ago.

2021 Outlook Lifted

National Vision updated its 2021 guidance.

Net revenues are expected in the range of $2.01-$2.06 billion (an improvement from the previously-announced view of $1.98-$2.03 billion). The Zacks Consensus Estimate for the same is currently pegged at $2.01 billion.

The adjusted EPS estimate guidance has also been raised to the band of $1.28-$1.33 (from the previous guided range of $1.07-$1.12). The Zacks Consensus Estimate for the same is currently pegged at $1.09.

Adjusted comparable store sales growth is expected within 19-22% (16-19%).

Our Take

National Vision reported better-than-expected results for second-quarter 2021. The top-line strength was led by growth in Americas Best and Eyeglass World brands along with strength in the company’s legacy segment. The company witnessed comparable growth on increased customer transaction in the reported quarter. According to the company, increased demand for low-cost eye exams, glasses and contact lenses contributed to making an outstanding second quarter. Expansion of both margins bodes well. Despite the pandemic, based on the solid year-to-date momentum, the company has raised its full-year 2021 guidance. However, escalating expenses are building pressure on the bottom line. The company’s operation in a tough competitive space along with its high dependence on vendors is worrying as well.

Zacks Rank and Key Picks

The company currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader medical space that have announced their quarterly results are Encompass Health Corporation (EHC - Free Report) , West Pharmaceutical Services, Inc. (WST - Free Report) and Henry Schein, Inc. (HSIC - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Encompass Health reported second-quarter 2021 adjusted EPS of $1.17, which beat the Zacks Consensus Estimate by 15.8%. Revenues of $1.3 billion outpaced the consensus mark by 1.5%.

West Pharmaceutical reported second-quarter 2021 adjusted EPS of $2.46, which surpassed the Zacks Consensus Estimate by 41.4%. Revenues of $723.6 million outpaced the Zacks Consensus Estimate by 8.7%.

Henry Schein reported second-quarter 2021 adjusted EPS of $1.11, surpassing the Zacks Consensus Estimate by 16.8%. Revenues of $2.97 billion surpassed the Zacks Consensus Estimate by 2.7%.