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National Vision (EYE) Q4 Earnings Top Estimates, Margins Fall
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National Vision Holdings, Inc. (EYE - Free Report) delivered an adjusted loss per share of 2 cents for the fourth quarter of 2023, narrower than the year-ago quarter’s adjusted loss of 8 cents. The figure topped the Zacks Consensus Estimate of a loss of 16 cents per share.
GAAP loss in the quarter was 20 cents per share, marking a significant decline from the prior-year reported loss of 12 cents.
Full-year 2023 GAAP loss was 84 cents per share against earnings of 53 cents in 2022.
Revenues in Detail
Revenues in the fourth quarter totaled $506.4 million, which surpassed the Zacks Consensus Estimate by 1.4%. The top line rose 8% from the year-ago quarter’s number, led by an increase in adjusted comparable store sales growth and growth from new store sales, partially offset by closed stores. The company registered higher revenues from the America's Best business.
In the fourth quarter, comparable store sales growth was 6% year over year. Adjusted comparable store sales growth was 5.7%. National Vision opened 17 new stores, closed two stores and transitioned four stores to Walmart as part of the partnership termination to reach a store count of 1,413 at the end of the quarter. Overall, the store count rose 4.4% year over year.
Till the end of 2023, National Vision continued to provide its principal products and services through two reportable segments — Owned & Host and Legacy. However, the termination of the longstanding Walmart contract (announced in July) will lead to a full dilution of the company’s Legacy business, effective 2024.
National Vision Holdings, Inc. Price, Consensus and EPS Surprise
The gross profit in the fourth quarter was $259.4 million, up 5.1% from the prior-year quarter’s level. Yet, gross margin of 51.2% contracted 139 basis points (bps).
SG&A expenses rose 6.1% year over year to $248.3 million. The adjusted operating margin was 2.2%, contracting 53 bps year over year.
Financial Position
National Vision exited 2023 with cash and cash equivalents of $149.9 million compared with $229.4 million at the end of the previous year.
The cumulative net cash flow from operating activities at the end of the quarter was $173 million compared with $119.2 million a year ago.
2024 Outlook
National Vision provided its full-year 2024 guidance.
For 2024, net revenues are expected to be in the range of $1.965-$2.005 billion. Adjusted comparable store sales are expected at 2-4%.
Adjusted EPS is estimated to be in the band of 50-65 cents. The Zacks Consensus Estimate for the same is currently pegged at 54 cents.
Our Take
National Vision ended fourth-quarter 2023 with a narrower-than-expected loss and a revenue beat. The performance reflected strength in the managed care business, supported by the continued progress with expanding eye exam capacity, particularly within America's Best. Adjusted comparable store sales growth was driven by ongoing strength within America's Best and sequential improvement in the Eyeglass World sales.
Meanwhile, the contraction of both margins is worrisome. Higher SG&A expenses in the quarter implied an increase in performance-based incentives and stock-based compensation.
In July, National Vision announced the termination of the Walmart partnership, positioning the company to focus on core strategic initiatives to grow its freestanding brands — America’s Best and Eyeglass World. According to the latest update, effective Feb 23, 2024, the company has completed the transition of 229 Walmart Vision Center stores and remains on-track with its plans to wind down its AC Lens operations by Jun 30, 2024.
Zacks Rank and Key Picks
National Vision currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Stryker Corporation (SYK - Free Report) , Cencora, Inc. (COR - Free Report) and Cardinal Health (CAH - Free Report) .
Stryker, carrying a Zacks Rank #2 (Buy) at present, reported fourth-quarter 2023 adjusted EPS of $3.46, which beat the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus mark by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 5.1%.
Cencora, carrying a Zacks Rank #2 at present, reported first-quarter fiscal 2024 adjusted EPS of $3.28, which beat the Zacks Consensus Estimate by 14.7%. Revenues of $72.3 billion outpaced the Zacks Consensus Estimate by 5.1%.
COR has an earnings yield of 5.75% compared with the industry’s 1.85%. The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.7%.
Cardinal Health, sporting a Zacks Rank #1 at present, reported second-quarter fiscal 2024 adjusted earnings of $1.82, which beat the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion improved 11.6% on a year-over-year basis and also topped the Zacks Consensus Estimate by 1.1%.
CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.6%.
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National Vision (EYE) Q4 Earnings Top Estimates, Margins Fall
National Vision Holdings, Inc. (EYE - Free Report) delivered an adjusted loss per share of 2 cents for the fourth quarter of 2023, narrower than the year-ago quarter’s adjusted loss of 8 cents. The figure topped the Zacks Consensus Estimate of a loss of 16 cents per share.
GAAP loss in the quarter was 20 cents per share, marking a significant decline from the prior-year reported loss of 12 cents.
Full-year 2023 GAAP loss was 84 cents per share against earnings of 53 cents in 2022.
Revenues in Detail
Revenues in the fourth quarter totaled $506.4 million, which surpassed the Zacks Consensus Estimate by 1.4%. The top line rose 8% from the year-ago quarter’s number, led by an increase in adjusted comparable store sales growth and growth from new store sales, partially offset by closed stores. The company registered higher revenues from the America's Best business.
In the fourth quarter, comparable store sales growth was 6% year over year. Adjusted comparable store sales growth was 5.7%. National Vision opened 17 new stores, closed two stores and transitioned four stores to Walmart as part of the partnership termination to reach a store count of 1,413 at the end of the quarter. Overall, the store count rose 4.4% year over year.
Till the end of 2023, National Vision continued to provide its principal products and services through two reportable segments — Owned & Host and Legacy. However, the termination of the longstanding Walmart contract (announced in July) will lead to a full dilution of the company’s Legacy business, effective 2024.
National Vision Holdings, Inc. Price, Consensus and EPS Surprise
National Vision Holdings, Inc. price-consensus-eps-surprise-chart | National Vision Holdings, Inc. Quote
Margins
The gross profit in the fourth quarter was $259.4 million, up 5.1% from the prior-year quarter’s level. Yet, gross margin of 51.2% contracted 139 basis points (bps).
SG&A expenses rose 6.1% year over year to $248.3 million. The adjusted operating margin was 2.2%, contracting 53 bps year over year.
Financial Position
National Vision exited 2023 with cash and cash equivalents of $149.9 million compared with $229.4 million at the end of the previous year.
The cumulative net cash flow from operating activities at the end of the quarter was $173 million compared with $119.2 million a year ago.
2024 Outlook
National Vision provided its full-year 2024 guidance.
For 2024, net revenues are expected to be in the range of $1.965-$2.005 billion. Adjusted comparable store sales are expected at 2-4%.
Adjusted EPS is estimated to be in the band of 50-65 cents. The Zacks Consensus Estimate for the same is currently pegged at 54 cents.
Our Take
National Vision ended fourth-quarter 2023 with a narrower-than-expected loss and a revenue beat. The performance reflected strength in the managed care business, supported by the continued progress with expanding eye exam capacity, particularly within America's Best. Adjusted comparable store sales growth was driven by ongoing strength within America's Best and sequential improvement in the Eyeglass World sales.
Meanwhile, the contraction of both margins is worrisome. Higher SG&A expenses in the quarter implied an increase in performance-based incentives and stock-based compensation.
In July, National Vision announced the termination of the Walmart partnership, positioning the company to focus on core strategic initiatives to grow its freestanding brands — America’s Best and Eyeglass World. According to the latest update, effective Feb 23, 2024, the company has completed the transition of 229 Walmart Vision Center stores and remains on-track with its plans to wind down its AC Lens operations by Jun 30, 2024.
Zacks Rank and Key Picks
National Vision currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Stryker Corporation (SYK - Free Report) , Cencora, Inc. (COR - Free Report) and Cardinal Health (CAH - Free Report) .
Stryker, carrying a Zacks Rank #2 (Buy) at present, reported fourth-quarter 2023 adjusted EPS of $3.46, which beat the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus mark by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 5.1%.
Cencora, carrying a Zacks Rank #2 at present, reported first-quarter fiscal 2024 adjusted EPS of $3.28, which beat the Zacks Consensus Estimate by 14.7%. Revenues of $72.3 billion outpaced the Zacks Consensus Estimate by 5.1%.
COR has an earnings yield of 5.75% compared with the industry’s 1.85%. The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.7%.
Cardinal Health, sporting a Zacks Rank #1 at present, reported second-quarter fiscal 2024 adjusted earnings of $1.82, which beat the Zacks Consensus Estimate by 16.7%. Revenues of $57.45 billion improved 11.6% on a year-over-year basis and also topped the Zacks Consensus Estimate by 1.1%.
CAH has a long-term estimated earnings growth rate of 15.3% compared with the industry’s 11.8% growth. The company’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.6%.