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National Vision (EYE) Gains Market Share Despite Macro Woes
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National Vision Holdings, Inc. (EYE - Free Report) has been benefiting from the strong execution of core growth initiatives. Yet, the termination of the legacy business continues to dent growth. The stock carries a Zacks Rank #3 (Hold) currently.
National Vision’s four sub-segments within Owned and Host are consistently gaining market share, banking on several growth drivers. These include diminishing eyesight with increasing age, which is leading new customers to buy corrective eyewear, and a steady and consistent replacement cycle, with customers replacing or purchasing 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 also deploying remote medicine technology in tandem with electronic health record technology to drive expanded capacity, improve 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.
In the first quarter of 2024, the company expanded remote capabilities with the opening of 14 new America's Best and the conversion of 20 Eyeglass World stores to America's Best. Store digitization efforts, such as the rollout of Electronic Health Records or EHR in America's Best locations, are also progressing well.
Meanwhile, National Vision continues to execute core growth initiatives and further invest in strengthening competitive advantages. Since the past few quarters, the company has successfully expanded its exam capacity, achieving a second consecutive year of improved retention and a record year for recruiting more experienced student hires.
Image Source: Zacks Investment Research
In terms of store expansion, National Vision continues to see a sizable new opportunity with growth for many years to come. It aims to open another 65 to 70 stores in 2024, a vast majority of which will be under the America's Best brand. The company is leveraging its omnichannel capabilities by testing and advancing programs that attract consumers across omnichannel offerings. The strategic move is expected to drive operational efficiencies such as reduced field overheads, leveraging of national advertising, better leveraging of optometrist deployment and reduced travel.
Based on independent research, the company is raising its whitespace opportunity for its America’s Best brand by 350 stores, for a new total of at least 1,650 locations. The analysis assumes maintaining the whitespace opportunity for Eyeglass World of at least 850 locations. In total, the company now believes its whitespace opportunity to be at least 2,500 stores.
On the flip side, over the past few years, global markets and economic conditions have been challenging, particularly in light of rising interest rates, historic inflation throughout 2023 and global conflict, which has created continued economic uncertainty. The company expects the challenges to persist in 2024 and beyond.
In this regard, the company made targeted wage investments, including increasing compensation for optometrists and associates, as well as flexibility initiatives, which have and will continue to impact costs related to revenues, such as selling, general and administrative (SG&A) expenses. In the first quarter of 2024, SG&A expenditures were 45.2% of the total revenues and rose 5.2% year over year. The company apprehends that the wage investment pressure and increases in raw materials prices may not be fully offset by leveraging revenue growth, productivity efficiency and various pricing actions.
Further, effective Feb 23, 2024, National Vision ceased operating Vision Centers for Walmart. This development came on the heels of the company’s announcement of the termination of the longstanding partnership in July 2023.
In this regard, the company noted that the termination of the partnership and the winding down of AC Lens operations will reduce its revenues, profitability and cash flows, thus affecting its operational results and financial condition. In connection with the termination of these agreements, the company recorded $60.1 million related to goodwill of the Legacy segment in 2023, along with $9.1 million related to Walmart contracts and relationships and $10.5 million related to property & equipment, which adversely impacted its profitability during this period. The company anticipates incurring nearly $3 million of additional costs in 2024 related to the winding down of the AC Lens business.
The Hims & Hers Heath stock has surged 121.6% in the past year. Estimates for the company’s 2024 earnings have moved north by 11.1% to 20 cents per share in the past 30 days.
HIMS’ earnings beat estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 79.2%. In the last reported quarter, it posted an earnings surprise of a staggering 150%.
Estimates for The Joint’s 2024 earnings per share (EPS) have remained constant at 21 cents in the past 30 days. In the past year, shares of JYNT have risen 4.3% compared with the industry’s 5.4% growth.
In the last reported quarter, JYNT delivered an earnings surprise of 300%. It has a trailing four-quarter average earnings surprise of 18.75%.
Estimates for Medpace’s 2024 EPS have remained unchanged at $11.29 in the past 30 days. Shares of the company have surged 72.3% in the past year compared with the industry’s 5.8% growth.
MEDP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.8%. In the last reported quarter, it delivered an earnings surprise of 30.6%.
Image: Shutterstock
National Vision (EYE) Gains Market Share Despite Macro Woes
National Vision Holdings, Inc. (EYE - Free Report) has been benefiting from the strong execution of core growth initiatives. Yet, the termination of the legacy business continues to dent growth. The stock carries a Zacks Rank #3 (Hold) currently.
National Vision’s four sub-segments within Owned and Host are consistently gaining market share, banking on several growth drivers. These include diminishing eyesight with increasing age, which is leading new customers to buy corrective eyewear, and a steady and consistent replacement cycle, with customers replacing or purchasing 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 also deploying remote medicine technology in tandem with electronic health record technology to drive expanded capacity, improve 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.
In the first quarter of 2024, the company expanded remote capabilities with the opening of 14 new America's Best and the conversion of 20 Eyeglass World stores to America's Best. Store digitization efforts, such as the rollout of Electronic Health Records or EHR in America's Best locations, are also progressing well.
Meanwhile, National Vision continues to execute core growth initiatives and further invest in strengthening competitive advantages. Since the past few quarters, the company has successfully expanded its exam capacity, achieving a second consecutive year of improved retention and a record year for recruiting more experienced student hires.
Image Source: Zacks Investment Research
In terms of store expansion, National Vision continues to see a sizable new opportunity with growth for many years to come. It aims to open another 65 to 70 stores in 2024, a vast majority of which will be under the America's Best brand. The company is leveraging its omnichannel capabilities by testing and advancing programs that attract consumers across omnichannel offerings. The strategic move is expected to drive operational efficiencies such as reduced field overheads, leveraging of national advertising, better leveraging of optometrist deployment and reduced travel.
Based on independent research, the company is raising its whitespace opportunity for its America’s Best brand by 350 stores, for a new total of at least 1,650 locations. The analysis assumes maintaining the whitespace opportunity for Eyeglass World of at least 850 locations. In total, the company now believes its whitespace opportunity to be at least 2,500 stores.
On the flip side, over the past few years, global markets and economic conditions have been challenging, particularly in light of rising interest rates, historic inflation throughout 2023 and global conflict, which has created continued economic uncertainty. The company expects the challenges to persist in 2024 and beyond.
In this regard, the company made targeted wage investments, including increasing compensation for optometrists and associates, as well as flexibility initiatives, which have and will continue to impact costs related to revenues, such as selling, general and administrative (SG&A) expenses. In the first quarter of 2024, SG&A expenditures were 45.2% of the total revenues and rose 5.2% year over year. The company apprehends that the wage investment pressure and increases in raw materials prices may not be fully offset by leveraging revenue growth, productivity efficiency and various pricing actions.
Further, effective Feb 23, 2024, National Vision ceased operating Vision Centers for Walmart. This development came on the heels of the company’s announcement of the termination of the longstanding partnership in July 2023.
In this regard, the company noted that the termination of the partnership and the winding down of AC Lens operations will reduce its revenues, profitability and cash flows, thus affecting its operational results and financial condition. In connection with the termination of these agreements, the company recorded $60.1 million related to goodwill of the Legacy segment in 2023, along with $9.1 million related to Walmart contracts and relationships and $10.5 million related to property & equipment, which adversely impacted its profitability during this period. The company anticipates incurring nearly $3 million of additional costs in 2024 related to the winding down of the AC Lens business.
Key Picks
Some better-ranked stocks in the broader medical space are Hims & Hers Health, Inc. (HIMS - Free Report) , The Joint Corp. (JYNT - Free Report) , and Medpace Holdings (MEDP - Free Report) . While Hims & Hers and The Joint currently sport a Zacks Rank #1 (Strong Buy) each, Medpace carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Hims & Hers Heath stock has surged 121.6% in the past year. Estimates for the company’s 2024 earnings have moved north by 11.1% to 20 cents per share in the past 30 days.
HIMS’ earnings beat estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 79.2%. In the last reported quarter, it posted an earnings surprise of a staggering 150%.
Estimates for The Joint’s 2024 earnings per share (EPS) have remained constant at 21 cents in the past 30 days. In the past year, shares of JYNT have risen 4.3% compared with the industry’s 5.4% growth.
In the last reported quarter, JYNT delivered an earnings surprise of 300%. It has a trailing four-quarter average earnings surprise of 18.75%.
Estimates for Medpace’s 2024 EPS have remained unchanged at $11.29 in the past 30 days. Shares of the company have surged 72.3% in the past year compared with the industry’s 5.8% growth.
MEDP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 12.8%. In the last reported quarter, it delivered an earnings surprise of 30.6%.