tiprankstipranks
Market News

National Vision Drops 13% Despite Topping Q3 Results

American optical retail company National Vision Holdings, Inc. (EYE) has reported better-than-expected third-quarter results, as both earnings and revenue surpassed estimates.

However, shares of the company fell 13.1% to close at $55.22 on November 10 after the company’s guidance fell below analysts’ expectations.

Better-Than-Expected Results

The company reported adjusted earnings of $0.38 per share, down 28.5% year-over-year, but higher than the Street’s estimate of $0.25 per share.

Moreover, net revenue climbed 6.7% year-over-year to $518 million, outpacing consensus estimates of $511.64 million.

During the quarter, EYE’s Comparable Store sales grew 3.4% year-over-year. The company opened 14 new stores and closed one store, raising the overall store count by 5.1% against the same quarter last year.

Management Comments

Commenting on the results, Reade Fahs, the CEO of National Vision, said, “Despite Delta variant concerns and a decline from an elevated average ticket last year, we delivered a slight comp increase against 2020 on continued growth in customer transactions… Looking ahead, as sales trends and customer demand continue to normalize from record levels during the COVID-19 pandemic, we believe we remain in a position of strength to continue to deliver sustainable growth.”

Additionally, the company’s Board of Directors also approved a $50 million stock buyback program and prepaid $50 million of its term loan, aided by strong cash flows.

See Analysts’ Top Stocks on TipRanks >>

Updated Guidance

Based on the current business momentum and assuming no further deterioration from the COVID-19 pandemic, the company updated its full-year 2021 outlook.

For FY21, EYE forecasts net revenue to be between $2.04 million and $2.06 billion, marginally lower than the consensus estimate of $2.07 billion.

Further, while adjusted earnings are projected to fall in the range of $1.28 per share to $1.33 per share, the consensus estimate for the same is pegged at $1.34 per share.

Analysts’ Take

Impressed by National Vision’s quarterly performance, Wells Fargo analyst Zachary Fadem maintained a Buy rating on the stock and lifted the price target to $65 (17.71% upside potential) from $60.

Fadem said, “The post-pandemic transition period continues to evolve, with 2H comps modestly positive, strong Q3 profitability, and limited supply chain pressures the notable highlights. But the go forward message reflects a business that’s still normalizing into tougher compares, with higher wage/ad spend and incremental Q4 headwinds.”

Having said that, the analyst is encouraged by EYE’s ongoing share gains, and fifth straight quarter of double-digit positive earnings before interest and tax (EBIT) margins. Backed by the recent pullback in shares and a conservative outlook, Fadem sees a good entry point into the stock and is optimistic about EYE’s long-term growth potential.

Based on 6 Buys and 2 Holds, the stock commands a Strong Buy consensus rating. The average National Vision price target of $63.75 implies 15.45% upside potential to current levels. Shares have gained 20.9% over the past year.

Smart Score

Markedly, National Vision has a “Perfect Score” on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

Related News:
ContextLogic Down 4.3% Despite Q3 Beat
Monday.com Plunges 21% Despite Outstanding Q3 Results
fuboTV Falls 7% Despite Solid Q3 Results

Tired of arriving late to the Big Returns Party?​
Most investors don’t have major gainers like TSLA or NVDA on their radar from the start.
The profusion of opinions on social media and financial blogs makes it impossible to distinguish between real growth potential and pure hype.
​​For the past decade, we have developed and perfected technology designed to help private investors, just like you, find the best opportunities, with the greatest upside potential, in any financial climate.​
Learn More