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National Vision (EYE) Up 21.6% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for National Vision (EYE - Free Report) . Shares have added about 21.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is National Vision due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

National Vision Tops Q1 Earnings Estimates, Cuts ’22 View

National Vision delivered adjusted earnings per share of 33 cents for the first quarter of 2022, reflecting a decline of 31.3% from the year-ago 48 cents. However, the figure surpassed the Zacks Consensus Estimate by 22.2%.

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

GAAP earnings per share for the quarter was 34 cents compared with the year-ago earnings per share of 48 cents, reflecting a 29.2% decline.

Revenues in Detail

Revenues in the first quarter totaled $527.7 million, lagging the Zacks Consensus Estimate by 4.1%. The top line declined 1.2% from the year-ago number. The decline in net revenues is attributable to the omicron impact, macroeconomic headwinds, constraints to exam capacity and strong performance in the previous year.

In the first quarter, comparable store sales growth declined 4.9%, whereas adjusted comparable store sales growth plunged 6.8%. National Vision opened 17 new stores and closed three stores to reach a store count of 1,292 at the end of the quarter. Overall, the store count grew 5% year over year.

Margins

Gross profit in the reported quarter was $291.7 million, down 5.8% from the prior-year quarter. Gross margin of 55.3% contracted 267 basis points (bps).

Meanwhile, selling, general and administrative expenses increased 2.2% to $228.6 million. Adjusted operating margin was 11.9%, contracted 412 bps year over year.

Financial Position

National Vision exited the first quarter of 2022 with cash and cash equivalents of $314.6 million compared with $305.8 million at the end of 2021.

Cumulative net cash flow from operating activities at the end of the quarter was $47.1 million compared with $97.7 million a year ago.

2022 Outlook

National Vision has updated its 2022 guidance.

For 2022, net revenues are expected in the range of $2.01-$2.07 billion (down from the prior-estimated $2.12-$2.17 billion). The Zacks Consensus Estimate for the same is currently pegged at $2.16 billion.

Adjusted earnings per share are estimated in the band of 65-80 cents (down from the prior-estimated $1.03-$1.10). The Zacks Consensus Estimate for the same is currently pegged at $1.07.

Adjusted comparable store sales growth is expected in the range of (7%)-(4%), down from the earlier projected range within (1%)-1.5%.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -72.22% due to these changes.

VGM Scores

At this time, National Vision has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise National Vision has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

National Vision is part of the Zacks Medical - Products industry. Over the past month, NuVasive (NUVA - Free Report) , a stock from the same industry, has gained 7.7%. The company reported its results for the quarter ended March 2022 more than a month ago.

NuVasive reported revenues of $290.76 million in the last reported quarter, representing a year-over-year change of +7.2%. EPS of $0.54 for the same period compares with $0.37 a year ago.

For the current quarter, NuVasive is expected to post earnings of $0.56 per share, indicating a change of -6.7% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for NuVasive. Also, the stock has a VGM Score of A.


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