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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 to grow in the coming quarters, backed by comparable store sales growth and new store sales. The ongoing execution of strategic initiatives bodes well for the company. Further, the strong liquidity supports its robust and disciplined capital allocation plan, which is highly encouraging.
Meanwhile, the company’s substantial reliance on vendors and other macroeconomic pressures could pose a challenge.
In the past year, this Zacks Rank #3 (Hold) stock has declined 51.2% compared with the 6% fall of the industry and a 15.7% rise of the S&P 500 composite.
The leading optical retailer has a market capitalization of $1.49 billion. The company projects long-term estimated earnings growth of 14.5% compared with the industry’s 11.7%. National Vision surpassed estimates in three of the trailing four quarters and missed in one, delivering an earnings surprise of 48.3%, on average.
Let’s delve deeper.
Upsides
Owned & Host Gains Market Share: All four subsegments within Owned and Host are consistently gaining market share, banking on several growth drivers. These include diminishing eyesight with increasing age, causing new customers to buy corrective eyewear, and a steady and consistent replacement cycle as customers replace or purchase new eyewear for a variety of reasons, including changes in prescriptions, fashion trends and necessity. America's Best and Eyeglass World are particularly driving revenues.
National Vision is deploying remote medicine technology in tandem with electronic health record technology to drive expanded capacity, enhance in-store efficiencies and improve the patient experience. The combination of these initiatives is resulting in added exam capacity in sales that the company would not have had otherwise. Per the company’s third-quarter 2023 update, National Vision opened 70 new America’s Best and Eyeglass World stores.
Image Source: Zacks Investment Research
Future Strategies Look Promising: National Vision plans to continue executing core growth initiatives and further investing in strengthening competitive advantages. In terms of store expansion, the company continues to see a sizable new opportunity with growth for many years to come.
Marketing continues to be a key factor in driving traffic to National Vision’s stores, given the infrequent purchase cycle for eyeglasses. Year to date, EYE has invested $82 million in capital expenditures, primarily focused on new store openings and investment in labs, distribution centers and customer-facing technology. 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.
Solvency and Capital Structure: National Vision exited the third quarter of 2023 with cash and cash equivalents of $266 million and a corresponding short-term debt of $11 million. This is good news in terms of the company’s solvency position. Long-term debt came up to $552 million in the third quarter compared with $555 million at the end of the second quarter.
Downsides
Rising Inflation Leads to Mounting Expenses: The company anticipates that pressures from increases in raw material prices could have an impact on its costs applicable to revenues in 2023. Throughout 2023, targeted wage investments, including increases in compensation for optometrists and associates, as well as flexibility initiatives, impacted costs and SG&A expenses. Wage pressures in certain markets are likely to continue for the rest of the year.
Management also apprehended that wage investment pressure and increases in raw material prices in 2023 may not be able to be fully offset by leverage from revenue growth, productivity efficiency and various pricing actions.
High Dependence on Vendors: National Vision procures almost all of its merchandise from domestic and international vendors. Moreover, the company has ties with a very limited number of suppliers for the majority of its eyeglass frames, eyeglass lenses and contact lenses. Thus, high dependence on a limited number of suppliers exposes it to concentration of supplier risk. In tough times, EYE may find it difficult to look for an alternative source of procurements in a timely or cost-effective manner.
Estimate Trend
The Zacks Consensus Estimate for National Vision’s 2023 earnings per share (EPS) has moved up from 54 cents to 55 cents in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $2.12 billion. This suggests a 5.6% rise from the year-ago reported number.
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 15.8%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 16.1%. Its shares have decreased 1.9% compared with the industry’s 6% fall in the past year.
Insulet, sporting a Zacks Rank #1 at present, has a long-term estimated earnings growth rate of 39.2% compared with the industry’s 11.7%. Shares of the company have decreased 37.6% compared with the industry’s 6% decline over the past year.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.5%.
DexCom, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 33.6% compared with the industry’s 13.8%. Shares of DXCM have decreased 4% compared with the industry’s 6.5% decline over the past year.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.
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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 to grow in the coming quarters, backed by comparable store sales growth and new store sales. The ongoing execution of strategic initiatives bodes well for the company. Further, the strong liquidity supports its robust and disciplined capital allocation plan, which is highly encouraging.
Meanwhile, the company’s substantial reliance on vendors and other macroeconomic pressures could pose a challenge.
In the past year, this Zacks Rank #3 (Hold) stock has declined 51.2% compared with the 6% fall of the industry and a 15.7% rise of the S&P 500 composite.
The leading optical retailer has a market capitalization of $1.49 billion. The company projects long-term estimated earnings growth of 14.5% compared with the industry’s 11.7%. National Vision surpassed estimates in three of the trailing four quarters and missed in one, delivering an earnings surprise of 48.3%, on average.
Let’s delve deeper.
Upsides
Owned & Host Gains Market Share: All four subsegments within Owned and Host are consistently gaining market share, banking on several growth drivers. These include diminishing eyesight with increasing age, causing new customers to buy corrective eyewear, and a steady and consistent replacement cycle as customers replace or purchase new eyewear for a variety of reasons, including changes in prescriptions, fashion trends and necessity. America's Best and Eyeglass World are particularly driving revenues.
National Vision is deploying remote medicine technology in tandem with electronic health record technology to drive expanded capacity, enhance in-store efficiencies and improve the patient experience. The combination of these initiatives is resulting in added exam capacity in sales that the company would not have had otherwise. Per the company’s third-quarter 2023 update, National Vision opened 70 new America’s Best and Eyeglass World stores.
Image Source: Zacks Investment Research
Future Strategies Look Promising: National Vision plans to continue executing core growth initiatives and further investing in strengthening competitive advantages. In terms of store expansion, the company continues to see a sizable new opportunity with growth for many years to come.
Marketing continues to be a key factor in driving traffic to National Vision’s stores, given the infrequent purchase cycle for eyeglasses. Year to date, EYE has invested $82 million in capital expenditures, primarily focused on new store openings and investment in labs, distribution centers and customer-facing technology. 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.
Solvency and Capital Structure: National Vision exited the third quarter of 2023 with cash and cash equivalents of $266 million and a corresponding short-term debt of $11 million. This is good news in terms of the company’s solvency position. Long-term debt came up to $552 million in the third quarter compared with $555 million at the end of the second quarter.
Downsides
Rising Inflation Leads to Mounting Expenses: The company anticipates that pressures from increases in raw material prices could have an impact on its costs applicable to revenues in 2023. Throughout 2023, targeted wage investments, including increases in compensation for optometrists and associates, as well as flexibility initiatives, impacted costs and SG&A expenses. Wage pressures in certain markets are likely to continue for the rest of the year.
Management also apprehended that wage investment pressure and increases in raw material prices in 2023 may not be able to be fully offset by leverage from revenue growth, productivity efficiency and various pricing actions.
High Dependence on Vendors: National Vision procures almost all of its merchandise from domestic and international vendors. Moreover, the company has ties with a very limited number of suppliers for the majority of its eyeglass frames, eyeglass lenses and contact lenses. Thus, high dependence on a limited number of suppliers exposes it to concentration of supplier risk. In tough times, EYE may find it difficult to look for an alternative source of procurements in a timely or cost-effective manner.
Estimate Trend
The Zacks Consensus Estimate for National Vision’s 2023 earnings per share (EPS) has moved up from 54 cents to 55 cents in the past 30 days.
The Zacks Consensus Estimate for the company’s 2023 revenues is pegged at $2.12 billion. This suggests a 5.6% rise from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Haemonetics (HAE - Free Report) , Insulet (PODD - Free Report) and DexCom (DXCM - Free Report) .
Haemonetics has an estimated earnings growth rate of 28.4% for fiscal 2024 compared with the industry’s 15.8%. HAE’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 16.1%. Its shares have decreased 1.9% compared with the industry’s 6% fall in the past year.
HAE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Insulet, sporting a Zacks Rank #1 at present, has a long-term estimated earnings growth rate of 39.2% compared with the industry’s 11.7%. Shares of the company have decreased 37.6% compared with the industry’s 6% decline over the past year.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.5%.
DexCom, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 33.6% compared with the industry’s 13.8%. Shares of DXCM have decreased 4% compared with the industry’s 6.5% decline over the past year.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.