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Kits Eyecare (TSE:KITS)
TSX:KITS
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Kits Eyecare
(TSX:KITS)
72Outperform
Positive Factors
Insurance Partnerships
Insurance partners like VSP are expected to drive additional revenue growth for KITS by increasing the size of shopping carts paid through insurance.
Product Launch
KITS announced the launch of integrated vision care insurance support for US customers, which is seen as incrementally positive for its growth outlook.
Revenue Growth Potential
KITS has the potential to double its capacity to $500M in revenue with existing infrastructure and minimal capital expenditure.
Negative Factors
Operational Limits
When looking at options to expand beyond current capacity limits, the Company can effectively double capacity to ~$500M in revenue within its existing Vancouver infrastructure.
Valuation Concerns
KITS is valued at a lower multiple compared to e-commerce peers with similar growth rates, suggesting it remains notably undervalued.
Kits Eyecare (KITS) vs. S&P 500 (SPY)
Market Cap
C$370.99M
Dividend YieldN/A
Average Volume (3M)22.52K
Price to Earnings (P/E)78.9
Beta (1Y)0.86
Revenue Growth34.10%
EPS GrowthN/A
CountryCA
Employees162
SectorConsumer Cyclical
Sector Strength61
IndustrySpecialty Retail
Share Statistics
EPS (TTM)0.05
Shares Outstanding31,982,147
10 Day Avg. Volume23,716
30 Day Avg. Volume22,517
Financial Highlights & Ratios
PEG Ratio0.03
Price to Book (P/B)4.75
Price to Sales (P/S)0.00
P/FCF Ratio29.29
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$16.63Price Target Upside43.36% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Kits Eyecare Business Overview & Revenue Model
Company DescriptionKITS Eyecare is a leading online eyewear retailer that focuses on providing a wide range of high-quality eyewear products, including prescription glasses, contact lenses, and sunglasses. The company operates primarily in the e-commerce sector, leveraging a direct-to-consumer model to deliver a seamless shopping experience. KITS Eyecare prides itself on offering competitive prices, fast delivery, and exceptional customer service.
How the Company Makes MoneyKITS Eyecare generates revenue primarily through the sale of eyewear products via its online platform. The company's key revenue streams include the sale of prescription glasses, which often involve an upsell of premium lens options and coatings, and contact lenses, which cater to a recurring customer base due to the need for regular replacements. Additionally, KITS Eyecare may benefit from partnerships with eyewear brands and suppliers, allowing it to offer a diverse range of products. The company's direct-to-consumer model helps reduce overhead costs and increase margins, contributing to its overall profitability.
Kits Eyecare Financial Statement Overview
Summary
Kits Eyecare demonstrates a strong recovery with improving revenue, profitability, and cash flow metrics. While the balance sheet shows low leverage and solid equity, past financial instability highlights the need for ongoing stability. The company's trajectory appears positive, but continued monitoring of financial health is recommended.Income Statement
Kits Eyecare has shown a solid recovery with significant revenue growth over the past few years. The gross profit margin improved to 33.7%, and the net profit margin turned positive to 2% in the latest period. EBIT and EBITDA margins also showed positive trends, reflecting operational efficiency gains. However, historical volatility in earnings should be noted.85
Very Positive
Balance Sheet
The company maintains a healthy balance sheet with a debt-to-equity ratio of 0.22, indicating low leverage. The return on equity is positive at 5.38%, showcasing profitability. The equity ratio stands at 56.2%, reflecting a strong equity base. Although improving, prior challenges in equity and assets suggest caution.70
Positive
Cash Flow
Operating cash flow significantly improved, and free cash flow growth is strong at 436%. The operating cash flow to net income ratio is robust, suggesting efficient cash generation. Free cash flow to net income ratio also shows adequate conversion. Historical cash flow volatility remains a consideration.78
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 159.34M | 120.51M | 91.64M | 82.40M | 75.22M | Gross Profit |
| 53.65M | 40.79M | 29.25M | 20.89M | 21.39M | EBIT |
| 5.43M | -2.38M | -4.35M | -17.05M | 122.00K | EBITDA |
| 8.31M | 1.86M | -721.00K | -14.68M | -1.80M | Net Income Common Stockholders |
| 3.12M | -2.21M | -4.55M | -14.62M | -6.58M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 19.27M | 16.04M | 18.79M | 20.50M | 2.31M | Total Assets |
| 103.02M | 87.64M | 93.86M | 90.94M | 54.66M | Total Debt |
| 12.60M | 15.39M | 19.44M | 22.94M | 22.33M | Net Debt |
| -6.67M | -646.00K | 648.00K | 2.44M | 20.02M | Total Liabilities |
| 45.13M | 36.20M | 40.16M | 36.16M | 55.23M | Stockholders Equity |
| 57.89M | 51.45M | 53.71M | 54.78M | -573.00K |
| Cash Flow | Free Cash Flow | |||
| 9.88M | 1.84M | 4.42M | -23.09M | 3.96M | Operating Cash Flow |
| 13.04M | 2.40M | 4.68M | -19.46M | 4.18M | Investing Cash Flow |
| -3.15M | -563.00K | -258.00K | -3.63M | -225.00K | Financing Cash Flow |
| -5.02M | -5.07M | -5.13M | 41.48M | -4.84M |
Kits Eyecare Technical Analysis
Positive
11.60
Price Trends
10.81
Positive
9.67
Positive
9.77
Positive
Market Momentum
0.17
Positive
56.23
Neutral
34.45
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:KITS, the sentiment is Positive. The current price of 11.6 is above the 20-day moving average (MA) of 11.37, above the 50-day MA of 10.81, and above the 200-day MA of 9.77, indicating a bullish trend. The MACD of 0.17 indicates Positive momentum. The RSI at 56.23 is Neutral, neither overbought nor oversold. The STOCH value of 34.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:KITS.
Kits Eyecare Peers Comparison
Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Performance Comparison
TSE:KITS
Kits Eyecare
12.04
5.62
87.54%
TSE:BB
BlackBerry
5.42
1.19
28.13%
TSE:VOXR
Vox Royalty
4.43
1.73
64.07%
Kits Eyecare Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q3-2024)
| % Change Since: 2.38%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Positive
The earnings call highlights significant growth in revenue, customer engagement, and operational efficiency, with strong performance in both U.S. and Canadian markets. Product innovation and expanded offerings further support a positive outlook. The only notable challenge is the increase in customer acquisition costs.Q3-2024 Updates
Positive Updates
Record Quarterly Revenue and Customer Engagement
Achieved nearly $42 million in revenue for the quarter, equating to 34% organic year-over-year growth and an annual revenue run rate of over $167 million.
Eight Consecutive Quarters of Positive Adjusted EBITDA
Reported an adjusted EBITDA of 3.8% or $1.6 million, with net income of $0.1 million and earnings per share of $0.01.
Significant Growth in Contact Lens and Eyeglasses Segments
Record $36 million in contact lens sales and the eyeglasses segment increased by 43% year-over-year.
Strong Performance in the U.S. and Canadian Markets
U.S. business grew by a record 39% year-over-year, and Canadian business achieved a 24% growth rate.
Improved Operational Efficiency
Fulfillment expenses reduced by 180 basis points, and G&A expenses improved to 6.2% of sales.
Expansion of Product Lines and Innovation
Launched 190 new styles of glasses and expanded the Kits Daily Silicone Hydrogel line to include color contacts.
Negative Updates
Increased Customer Acquisition Costs
Customer acquisition costs were up around 20% year-over-year, reaching the highest level so far this year.
Company Guidance
During the Q3 2024 earnings call for Kits Eye Care, the company provided guidance for the upcoming quarter, projecting revenue between $43 million and $45 million, with an adjusted EBITDA margin target of 3% to 5%. This reflects a significant increase from the nearly $42 million in revenue achieved in Q3, which represented a 34% organic year-over-year growth. Kits Eye Care exceeded its previous guidance, which anticipated Q3 revenue between $39 million and $41 million, and an EBITDA margin of 3% to 5%, by delivering a 3.8% adjusted EBITDA or $1.6 million. The company reported a net income of $0.1 million and earnings per share of $0.01, while generating $2.2 million in positive cash flow from operations. Additionally, Kits reduced its debt principal by $1 million, maintaining a low debt balance with over $19 million in cash reserves. The Q3 results were driven by record performances in contact lens and eyeglasses sales, with the latter seeing a 43% year-over-year increase, and strong growth in both U.S. and Canadian markets.Kits Eyecare Corporate Events
Business Operations and StrategyFinancial Disclosures
Kits Eyecare Achieves Record First Quarter Results with 34% Revenue Growth
Positive
May 6, 2025
Kits Eyecare Ltd. reported a record-breaking first quarter in 2025, with a 34% increase in revenue year-over-year, reaching $46.6 million. The company’s adjusted EBITDA also improved significantly to $3.5 million, marking its tenth consecutive quarter of positive adjusted EBITDA. The growth was driven by increased sales of glasses, with 104,000 pairs delivered, and a focus on acquiring high-value customers. This financial performance underscores the strength of Kits’ vertically integrated model and its strategic focus on operational efficiency, positioning the company for sustained profitable growth.
Spark’s Take on TSE:KITS Stock
According to Spark, TipRanks’ AI Analyst, TSE:KITS is a Outperform.
Kits Eyecare earns an overall score of 74, driven by strong financial performance and positive technical momentum. The company’s significant revenue and profitability growth contribute positively, although the high P/E ratio raises valuation concerns. The absence of earnings call data limits further insights, but the corporate event underscores a positive trajectory.
To see Spark’s full report on TSE:KITS stock, click here.
Business Operations and StrategyFinancial Disclosures
Kits Eyecare Achieves Record Growth in 2024 with Strong Financial Performance
Positive
Mar 5, 2025
Kits Eyecare Ltd. reported a significant increase in revenue and profitability for the fourth quarter and full year 2024, with Q4 revenue rising by 42% year-over-year to $44.8 million and full-year revenue up by 32% to $159.3 million. The company achieved its ninth consecutive quarter of positive adjusted EBITDA, highlighting its strong business growth and market position. The management attributes this success to a focus on customer experience and growing demand for the KITS brand, with a notable milestone of delivering 1 million pairs of glasses.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.