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Here's Why You Should Retain National Vision (EYE) Stock Now
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National Vision Holdings, Inc. (EYE - Free Report) is well-poised for growth in the coming quarters with the ongoing comparable store increase. The company has been making investments for improved patient care and optometric experience, including investments in AI.
The patterns within the broader eyewear market are likely to bode well for EYE’s business. Meanwhile, mounting expenses and operating in a tough competitive environment are concerning for the company.
In the past year, this Zacks Rank #3 (Hold) stock has declined 3.2% compared with the 19.8% fall of the industry and a 19.2% rise of the S&P 500 composite.
The leading optical retailer has a market capitalization of $2.01 billion. The company projects long-term estimated earnings growth of 21.9% compared with the industry’s 14.1%. National Vision surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an earnings surprise of 69.9%, on average.
Let’s delve deeper.
Upsides
Comparable Store Growth Holds Promise: In the first quarter, National Vision opened eight stores (four America's Best and four Eyeglass World stores), with the expected launch of nearly 65 to 70 stores in 2023. The company noted that the new stores opened over the past 12 months are continuing to perform well and are in line with the company’s expectations.
In 2023, EYE invested $27.7 million in capital expenditures, primarily focused on new store openings and customer-facing technology investments. In terms of marketing, the company’s merchandising and distribution teams continue to execute well and are confident that the current inventory levels are sufficient to support continued growth in 2023.
Image Source: Zacks Investment Research
Favorable Industry Trends: Changing lifestyle patterns and the increasing adoption of luxurious accessories among millennials are strongly favoring the global eyewear market’s growth, valued at $169.9 billion in 2022. The establishment of remote working models during lockdown has factored in the increasing sales of blue light canceling and anti-fatigue lenses for eyewear companies.
Per a 2022 report by The Vision Council, 82% of respondents use a form of vision correction, 69% use prescription eyewear and 68% use some form of non-prescription eyewear.
Technological Investment: National Vision recently invested in an early-stage health care, AI start-up, Toku, alongside Topcon Healthcare. Through the investment, EYE is strengthening the future of optical care in which more people are able to have affordable access to potentially life-saving health data on an easily accessible, non-invasive test.
Downsides
Margins Down: EYE reported a significant year-over-year decline in first-quarter earnings. Escalating expenses caused a contraction in the gross and adjusted operating margins. The company is facing demand headwinds across its network of stores, given the current macro environment and supply challenges in a smaller subgroup of stores due to the constraints on eye exam capacity.
Tough Competition: In a highly competitive optical retail industry, National Vision competes with national retailers like LensCrafters, Pearle Vision and Visionworks. Competition exists in physical retail locations and e-commerce platforms.
The company also faces competitive threats from online sellers of contact lenses and eyewear. Several firms are focused on selling eyeglasses in the online market like Warby Parker and Zenni Optical.
Estimate Trend
The Zacks Consensus Estimate for EYE’s 2023 earnings per share (EPS) has remained constant at 50 cents in the past 30 days.
The Consensus Estimate for the company’s 2023 revenues is pegged at $2.12 billion. This suggests a 5.5% rise from the year-ago reported number.
Zimmer Biomet has an earnings yield of 5.17% compared to the industry’s -2.31%. Zimmer Biomet’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 7.38%. Its shares have increased 37.6% against the industry’s 19.8% decline in the past year.
Penumbra, sporting a Zacks Rank #1 at present, has an estimated growth rate of 64.1% for 2024. Penumbra shares have risen 175.7% compared with the industry’s 16.8% increase over the past year.
PEN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 109.4%.
Hologic, carrying a Zacks Rank #2 (Buy) at present, has an earnings yield of 4.79% compared to the industry’s -7.19%. Shares of HOLX have risen 20.5% compared with the industry’s 16.9% growth over the past year.
Hologic’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 27.3%.
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Here's Why You Should Retain National Vision (EYE) Stock Now
National Vision Holdings, Inc. (EYE - Free Report) is well-poised for growth in the coming quarters with the ongoing comparable store increase. The company has been making investments for improved patient care and optometric experience, including investments in AI.
The patterns within the broader eyewear market are likely to bode well for EYE’s business. Meanwhile, mounting expenses and operating in a tough competitive environment are concerning for the company.
In the past year, this Zacks Rank #3 (Hold) stock has declined 3.2% compared with the 19.8% fall of the industry and a 19.2% rise of the S&P 500 composite.
The leading optical retailer has a market capitalization of $2.01 billion. The company projects long-term estimated earnings growth of 21.9% compared with the industry’s 14.1%. National Vision surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an earnings surprise of 69.9%, on average.
Let’s delve deeper.
Upsides
Comparable Store Growth Holds Promise: In the first quarter, National Vision opened eight stores (four America's Best and four Eyeglass World stores), with the expected launch of nearly 65 to 70 stores in 2023. The company noted that the new stores opened over the past 12 months are continuing to perform well and are in line with the company’s expectations.
In 2023, EYE invested $27.7 million in capital expenditures, primarily focused on new store openings and customer-facing technology investments. In terms of marketing, the company’s merchandising and distribution teams continue to execute well and are confident that the current inventory levels are sufficient to support continued growth in 2023.
Image Source: Zacks Investment Research
Favorable Industry Trends: Changing lifestyle patterns and the increasing adoption of luxurious accessories among millennials are strongly favoring the global eyewear market’s growth, valued at $169.9 billion in 2022. The establishment of remote working models during lockdown has factored in the increasing sales of blue light canceling and anti-fatigue lenses for eyewear companies.
Per a 2022 report by The Vision Council, 82% of respondents use a form of vision correction, 69% use prescription eyewear and 68% use some form of non-prescription eyewear.
Technological Investment: National Vision recently invested in an early-stage health care, AI start-up, Toku, alongside Topcon Healthcare. Through the investment, EYE is strengthening the future of optical care in which more people are able to have affordable access to potentially life-saving health data on an easily accessible, non-invasive test.
Downsides
Margins Down: EYE reported a significant year-over-year decline in first-quarter earnings. Escalating expenses caused a contraction in the gross and adjusted operating margins. The company is facing demand headwinds across its network of stores, given the current macro environment and supply challenges in a smaller subgroup of stores due to the constraints on eye exam capacity.
Tough Competition: In a highly competitive optical retail industry, National Vision competes with national retailers like LensCrafters, Pearle Vision and Visionworks. Competition exists in physical retail locations and e-commerce platforms.
The company also faces competitive threats from online sellers of contact lenses and eyewear. Several firms are focused on selling eyeglasses in the online market like Warby Parker and Zenni Optical.
Estimate Trend
The Zacks Consensus Estimate for EYE’s 2023 earnings per share (EPS) has remained constant at 50 cents in the past 30 days.
The Consensus Estimate for the company’s 2023 revenues is pegged at $2.12 billion. This suggests a 5.5% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Zimmer Biomet (ZBH - Free Report) , Penumbra (PEN - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Zimmer Biomet has an earnings yield of 5.17% compared to the industry’s -2.31%. Zimmer Biomet’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 7.38%. Its shares have increased 37.6% against the industry’s 19.8% decline in the past year.
ZBH sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Penumbra, sporting a Zacks Rank #1 at present, has an estimated growth rate of 64.1% for 2024. Penumbra shares have risen 175.7% compared with the industry’s 16.8% increase over the past year.
PEN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 109.4%.
Hologic, carrying a Zacks Rank #2 (Buy) at present, has an earnings yield of 4.79% compared to the industry’s -7.19%. Shares of HOLX have risen 20.5% compared with the industry’s 16.9% growth over the past year.
Hologic’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 27.3%.