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National Vision (EYE) Q3 Earnings Top Estimates, Margins Fall

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National Vision Holdings Inc. (EYE - Free Report) delivered adjusted earnings per share (EPS) of 38 cents for the third quarter of 2021 against the loss of 54 cents per share a year ago. The figure exceeded the Zacks Consensus Estimate by 52%.

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 45 cents compared to the year-ago EPS of 42 cents, reflecting a 7.1% rise.

Revenues in Detail

Revenues in the third quarter totaled $518.1 million, beating the Zacks Consensus Estimate by 0.9%. The top line improved 6.7% from the year-ago number. The company noted that net revenues were positively impacted by 3% due to the timing of unearned revenues.

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

In the third quarter, comparable store sales growth was 4%, whereas adjusted comparable store sales growth was 0.2%. Also, National Vision opened 14 new stores and closed one to reach 1,262 stores at the end of the quarter. Overall, the store count grew 5.1% year over year.

Margins

Gross profit in the reported quarter was $291.5 million, up 6.2% from the prior-year quarter. Gross margin of 56.3% contracted 28 basis points (bps).

Meanwhile, selling, general and administrative expenses increased 14.5% to $218.2 million. Adjusted operating margin was 14.2%, down 316 bps year over year.

Financial Position

National Vision exited the third quarter of 2021 with cash and cash equivalents of $439.1 million compared with $408.3 million at the end of the second-quarter 2021.

Cumulative net cash flow from operating activities at the end of the third quarter was $233.8 million compared with $203.7 million a year ago.

2021 Outlook Lifted

National Vision updated its 2021 guidance.

Net revenues are expected in the range of $2.04-$2.06 billion (an improvement from the previously-announced view of $2.01-$2.06 billion). The Zacks Consensus Estimate for the same is currently pegged at $2.06 billion.

The adjusted EPS estimate has also been reinstated at the band of $1.28-$1.33. The Zacks Consensus Estimate for the same is currently pegged at $1.32.

Adjusted comparable store sales growth is expected within 21-22% (19-22%).

Our Take

National Vision reported better-than-expected results for third-quarter 2021. The top-line strength was led by growth in America’s Best and Eyeglass World brands and strength in the company’s legacy segment. The company witnessed comparable growth on increased customer transactions in the reported quarter. Despite the pandemic, the company has raised its full-year 2021 revenue guidance based on the solid year-to-date momentum. However, escalating expenses are building pressure on the bottom line. Contractions of both margins are discouraging. The company’s operation in a tough competitive space and its high dependence on vendors are also worrying.

Zacks Rank and Other Key Picks

National Vision currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few other top-ranked stocks in the broader medical space that have announced quarterly results are Thermo Fisher Scientific Inc. (TMO - Free Report) , Medpace Holdings, Inc. (MEDP - Free Report) and West Pharmaceutical Services, Inc. (WST - Free Report) .

Thermo Fisher Scientific reported third-quarter 2021 adjusted EPS of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Thermo Fisher Scientific's revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%. It currently carries a Zacks Rank #1.

Thermo Fisher has an estimated long-term growth rate of 14%. The company surpassed estimates in the trailing four quarters, the average surprise being 9.02%.

Medpace, currently carrying a Zacks Rank #2, reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.

Medpace has an estimated long-term growth rate of 16.4%. The company surpassed estimates in the trailing four quarters, the average surprise being 11.9%.

West Pharmaceutical Services, carrying a Zacks Rank #2, reported third-quarter 2021 adjusted EPS of $2.06, which beat the Zacks Consensus Estimate by 13.2%. Revenues of $706.5 million outpaced the consensus mark by 3.2%.

West Pharmaceutical Services has an estimated long-term growth rate of 27.6%. The company surpassed estimates in the trailing four quarters, the average surprise being 29.4%.