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Is it the Right Time to Hold EYE Stock in Your Portfolio Now?
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National Vision Holdings, Inc. (EYE - Free Report) is strengthening its foundation with leadership changes, expanded exam capacity and other strategic initiatives. Favorable optical retail industry statistics bode well for the company’s growth potential in the upcoming quarters. Furthermore, America's Best brand is boosting revenues, leveraging the ongoing strength of managed care. Meanwhile, a negative solvency position and escalated expenses pose concerns for National Vision’s operations.
In the past year, this Zacks Rank #3 (Hold) stock has fallen 40.6% compared with the industry’s 0.1% decline and the S&P 500 composite’s 24% rise.
The leading optical retailer has a market capitalization of $978.9 million. National Vision surpassed estimates in each of the trailing four quarters, delivering an earnings surprise of 93.7%, on average.
Tailwinds for EYE
Future Strategies Look Promising: National Vision is advancing its transformation efforts with new additions to the leadership team, continued expansion of exam capacity, new traffic-driving initiatives and efforts to strengthen its business foundation for profitable growth. It recently completed a comprehensive store fleet review to align its real estate investments with higher standards, optimize profitability for the long term and improve the overall health of the core business. The results of this review include a plan to close 39 stores through 2026, which is expected to deliver approximately $4 million in adjusted EBITDA improvement by the end of that year.
National Vision has temporarily moderated new store openings to 30-35 America’s Best stores in fiscal 2025, mostly all in remote-enabled states. Through these actions, the company expects to gain more flexibility to invest in the existing operations and deploy capital to initiatives that drive revenue growth and improve profitability. Furthermore, National Vision sees substantial potential for growth, with a whitespace opportunity of at least 2,500 stores, which is more than double the existing store count across its brands.
Favorable Industry Trends: National Vision operates in the U.S. optical retail industry, demonstrating consistent growth and resilience to economic cycles largely due to the medical, nondiscretionary and recurring eye care purchases. According to a 2023 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. Further, a 2023 WHO report states that nearly 2.2 billion individuals around the globe have a vision impairment, of which 1 billion have a vision impairment that is yet to be addressed.
Image Source: Zacks Investment Research
Leading causes of distance vision impairment or blindness are cataract, refractive error, age-related macular degeneration, glaucoma and diabetic retinopathy, while presbyopia mainly causes near vision impairment. The frequent replacement cycle marked by the repetitive and foreseeable nature of customer behavior, resulting in a substantial volume of recurring revenues for the optical retail industry, is another trending factor.
Owned & Host Gaining Market Share: Of the four sub-segments within Owned and Host, America's Best is particularly driving revenues banking on the ongoing strength of managed care. Recently, the brand introduced the Wide Buys promotion to enhance value offerings and attract new customers. The response for the first-ever “two pairs for $129.95, including an eye exam” progressive offer was positive. Following this, a new entry progressive bundled offer was launched that provides an ongoing everyday value. Also, in the third quarter of 2024, America’s Best became the exclusive U.S. retail partner of the Florence by Mills eyewear collection and launched an exclusive partnership with Pair Eyewear nationwide.
National Vision is deploying remote medicine technology in tandem with electronic health record technology to drive expanded capacity, improve in-store efficiencies and boost patient experience. The combination of these initiatives is resulting in added exam capacity in sales that the company would not have otherwise.
Concerns for National Vision
Mounting Expenses: Over the past few years, global markets and economic conditions have been challenging, particularly in light of rising interest rates and historic inflation throughout 2023 and global conflict, which has created continued economic uncertainty. 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 expenses.
Solvency and Capital Structure: National Vision exited the third quarter with cash and cash equivalents of $81.2 million and short-term debt of $101 million on its balance sheet. This is not good news in terms of the company’s solvency position, particularly during the time of macroeconomic headwinds when it is majorly facing supply issues globally. Added to this, long-term debt increased by nearly 75% from the second quarter, reaching $253 million.
EYE Stock Estimate Trend
The Zacks Consensus Estimate for National Vision’s 2024 earnings per share (EPS) has increased 4.1% to 52 cents in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $1.84 billion. This suggests a 13.3% decline from the year-ago reported number.
Top MedTech Stocks
Some better-ranked stocks in the broader medical space are Veracyte (VCYT - Free Report) , Phibro Animal Health (PAHC - Free Report) and Boston Scientific (BSX - Free Report) .
Veracyte has an estimated 2024 earnings growth rate of 209.8% compared with the industry’s 15.4%. Veracyte’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 520.6%. Its shares have surged 61.4% compared with the industry’s 5.2% growth in the past year.
Phibro Animal Health, also sporting a Zacks Rank #1 at present, has an estimated earnings growth rate of 54.6% for fiscal 2025 compared with the industry’s 14.8%. Shares of the company have surged 111.3% compared with the industry’s 13% growth over the past year. PAHC’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 27.1%.
Boston Scientific, carrying a Zacks Rank #2 (Buy), has an earnings yield of 2.7% compared with the industry’s 1.3%. Shares of the company have rallied 59.1% compared with the industry’s 13% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 8.3%.
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Is it the Right Time to Hold EYE Stock in Your Portfolio Now?
National Vision Holdings, Inc. (EYE - Free Report) is strengthening its foundation with leadership changes, expanded exam capacity and other strategic initiatives. Favorable optical retail industry statistics bode well for the company’s growth potential in the upcoming quarters. Furthermore, America's Best brand is boosting revenues, leveraging the ongoing strength of managed care. Meanwhile, a negative solvency position and escalated expenses pose concerns for National Vision’s operations.
In the past year, this Zacks Rank #3 (Hold) stock has fallen 40.6% compared with the industry’s 0.1% decline and the S&P 500 composite’s 24% rise.
The leading optical retailer has a market capitalization of $978.9 million. National Vision surpassed estimates in each of the trailing four quarters, delivering an earnings surprise of 93.7%, on average.
Tailwinds for EYE
Future Strategies Look Promising: National Vision is advancing its transformation efforts with new additions to the leadership team, continued expansion of exam capacity, new traffic-driving initiatives and efforts to strengthen its business foundation for profitable growth. It recently completed a comprehensive store fleet review to align its real estate investments with higher standards, optimize profitability for the long term and improve the overall health of the core business. The results of this review include a plan to close 39 stores through 2026, which is expected to deliver approximately $4 million in adjusted EBITDA improvement by the end of that year.
National Vision has temporarily moderated new store openings to 30-35 America’s Best stores in fiscal 2025, mostly all in remote-enabled states. Through these actions, the company expects to gain more flexibility to invest in the existing operations and deploy capital to initiatives that drive revenue growth and improve profitability. Furthermore, National Vision sees substantial potential for growth, with a whitespace opportunity of at least 2,500 stores, which is more than double the existing store count across its brands.
Favorable Industry Trends: National Vision operates in the U.S. optical retail industry, demonstrating consistent growth and resilience to economic cycles largely due to the medical, nondiscretionary and recurring eye care purchases. According to a 2023 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. Further, a 2023 WHO report states that nearly 2.2 billion individuals around the globe have a vision impairment, of which 1 billion have a vision impairment that is yet to be addressed.
Image Source: Zacks Investment Research
Leading causes of distance vision impairment or blindness are cataract, refractive error, age-related macular degeneration, glaucoma and diabetic retinopathy, while presbyopia mainly causes near vision impairment. The frequent replacement cycle marked by the repetitive and foreseeable nature of customer behavior, resulting in a substantial volume of recurring revenues for the optical retail industry, is another trending factor.
Owned & Host Gaining Market Share: Of the four sub-segments within Owned and Host, America's Best is particularly driving revenues banking on the ongoing strength of managed care. Recently, the brand introduced the Wide Buys promotion to enhance value offerings and attract new customers. The response for the first-ever “two pairs for $129.95, including an eye exam” progressive offer was positive. Following this, a new entry progressive bundled offer was launched that provides an ongoing everyday value. Also, in the third quarter of 2024, America’s Best became the exclusive U.S. retail partner of the Florence by Mills eyewear collection and launched an exclusive partnership with Pair Eyewear nationwide.
National Vision is deploying remote medicine technology in tandem with electronic health record technology to drive expanded capacity, improve in-store efficiencies and boost patient experience. The combination of these initiatives is resulting in added exam capacity in sales that the company would not have otherwise.
Concerns for National Vision
Mounting Expenses: Over the past few years, global markets and economic conditions have been challenging, particularly in light of rising interest rates and historic inflation throughout 2023 and global conflict, which has created continued economic uncertainty. 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 expenses.
Solvency and Capital Structure: National Vision exited the third quarter with cash and cash equivalents of $81.2 million and short-term debt of $101 million on its balance sheet. This is not good news in terms of the company’s solvency position, particularly during the time of macroeconomic headwinds when it is majorly facing supply issues globally. Added to this, long-term debt increased by nearly 75% from the second quarter, reaching $253 million.
EYE Stock Estimate Trend
The Zacks Consensus Estimate for National Vision’s 2024 earnings per share (EPS) has increased 4.1% to 52 cents in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $1.84 billion. This suggests a 13.3% decline from the year-ago reported number.
Top MedTech Stocks
Some better-ranked stocks in the broader medical space are Veracyte (VCYT - Free Report) , Phibro Animal Health (PAHC - Free Report) and Boston Scientific (BSX - Free Report) .
Veracyte has an estimated 2024 earnings growth rate of 209.8% compared with the industry’s 15.4%. Veracyte’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 520.6%. Its shares have surged 61.4% compared with the industry’s 5.2% growth in the past year.
VCYT sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Phibro Animal Health, also sporting a Zacks Rank #1 at present, has an estimated earnings growth rate of 54.6% for fiscal 2025 compared with the industry’s 14.8%. Shares of the company have surged 111.3% compared with the industry’s 13% growth over the past year. PAHC’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 27.1%.
Boston Scientific, carrying a Zacks Rank #2 (Buy), has an earnings yield of 2.7% compared with the industry’s 1.3%. Shares of the company have rallied 59.1% compared with the industry’s 13% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 8.3%.