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Why Is National Vision (EYE) Down 4.7% Since Last Earnings Report?

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It has been about a month since the last earnings report for National Vision (EYE - Free Report) . Shares have lost about 4.7% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is National Vision due for a breakout? 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’s Q1 Revenues Up on Comparable Store Sales

National Vision’s first-quarter 2019 adjusted earnings per share (EPS) of 33 cents were a penny ahead of the Zacks Consensus Estimate. However, the figure dipped 3.6% from the year-ago number.

Revenues in Detail

Net revenues in the quarter totaled $461.2 million, beating the Zacks Consensus Estimate by 1.4%. Moreover, revenues rose 13.1% from the year-ago quarter.

Comparable store sales grew 6.2% in the reported quarter (adjusted comparable store sales growth was 6.7%). This upside was led by an 8.2% comp increase at America's Best brand and a 6.5% comp rise at Eyeglass World brand.
Per management, this was the 69th consecutive quarter of positive comparable store sales growth.

Business Development

National Vision opened 26 new stores and closed three in first-quarter 2019. The company exited the quarter with 1,105 stores.

Margin Update

Gross margin contracted 172 bps year over year to 54% in the quarter under review. Selling, general and administrative expenses rose 13.5% year over year to $193.9 million. Adjusted operating margin (without depreciation and amortization, asset impairment and certain other non-recurring expenses) declined 193 bps to 12% from the year-ago quarter.

Financial Details

National Vision exited the first quarter of 2019 with cash and cash equivalents of $72.5 million compared with $17.1 million in 2018. For the first quarter, net cash provided by operating activities was $83 million compared with $77.8 million a year ago.

Guidance Issued

For 2019, the company reaffirmed its net revenue outlook of $1.675-$1.705 billion. Earlier, the company noted that the projection includes an estimated $20-25 million in incremental net revenues from the extended contact lens distribution association with Walmart. The Zacks Consensus Estimate for the same is pegged at $1.70 billion.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months.

VGM Scores

At this time, National Vision has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

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

Outlook

National Vision has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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