Kits Eyecare (KITS) AI Stock Analysis

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Kits Eyecare

(TSX:KITS)

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Neutral 59 (OpenAI - 4o)

Rating:59Neutral

Price Target:

C$17.00

▲(9.89% Upside)

Kits Eyecare's overall stock score is primarily influenced by its strong financial performance, characterized by revenue growth and improved profitability metrics. However, the high P/E ratio suggests overvaluation, and technical indicators point to short-term bearish momentum. The lack of earnings call data and corporate events further limits the assessment.

Positive Factors

Revenue Growth

The company's robust revenue growth indicates successful market penetration and product acceptance, supporting long-term business expansion.

Leverage Position

A lower debt-to-equity ratio reduces financial risk, enhancing the company's stability and ability to invest in growth opportunities.

Profitability Metrics

Improved gross profit margins indicate effective cost control, which can lead to better profitability and competitive pricing strategies.

Negative Factors

Cash Flow Generation

Declining free cash flow suggests challenges in cash generation, which could impact the company's ability to fund operations and growth initiatives.

Net Profit Margin

A modest net profit margin indicates limited profitability, which may constrain reinvestment in business growth and shareholder returns.

Operational Efficiency

Low EBIT and EBITDA margins suggest potential inefficiencies in operations, which could hinder profitability improvements and competitive positioning.

Kits Eyecare (KITS) vs. iShares MSCI Canada ETF (EWC)

Market Cap

C$514.18M

Dividend YieldN/A

Average Volume (3M)36.12K

Price to Earnings (P/E)134.0

Beta (1Y)0.71

Revenue Growth35.02%

EPS Growth1471.05%

CountryCA

Employees162

SectorConsumer Cyclical

Sector Strength84

IndustrySpecialty Retail

Share Statistics

EPS (TTM)-0.02

Shares Outstanding32,136,215

10 Day Avg. Volume42,279

30 Day Avg. Volume36,116

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

C$21.40

Price Target Upside38.33% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering5

Kits Eyecare Business Overview & Revenue Model

Company DescriptionKits Eyecare Ltd. operates a digital eyecare platform for eyes in the United States and Canada. The company manufactures progressive and contact lenses, eyeglasses, and frames under the KITS brand, as well as distributes eyewear products of various brands. It operates through a network of optical e-commerce websites, including KITS.com, KITS.ca, OptiContacts.com, and ContactsExpress.ca. The company was incorporated in 2018 and is headquartered in Vancouver, Canada.

How the Company Makes MoneyKits Eyecare generates revenue primarily through the sale of its eyewear products, including prescription eyeglasses, sunglasses, and contact lenses, directly to consumers via its e-commerce platform. The company capitalizes on the growing demand for online shopping by providing a convenient, user-friendly experience that allows customers to easily select and purchase optical products. Additionally, KITS may engage in strategic partnerships with eyewear brands and suppliers to broaden its product range and optimize its supply chain, thus contributing to its earnings. The company's revenue model is further supported by its focus on customer loyalty and retention through regular promotions and subscription services for contact lenses.

Kits Eyecare Earnings Call Summary

Earnings Call Date:Aug 05, 2025

(Q1-2025)

% Change Since: |

Next Earnings Date:Nov 05, 2025

Earnings Call Sentiment Positive

The earnings call highlighted strong revenue and profit growth, driven by significant customer acquisition and retention. While marketing expenses slightly increased and inventory levels were higher than usual, the overall performance demonstrated robust growth and profitability, with positive future projections.

Q1-2025 Updates

Positive Updates

Record Revenue Growth

Kits Eyecare reported record revenue of $46.6 million, up 34% year-over-year, surpassing their guidance range of $46 million to $48 million.

Significant Gross Profit and Margin Expansion

Gross profit grew over 53% year-over-year to $17.1 million, with gross margin expanding 460 basis points to 36.7%.

Strong Customer Growth

Kits welcomed over 95,000 new customers, a 28% increase year-over-year, with 62% of total revenue coming from returning customers.

Positive Adjusted EBITDA

The company achieved its 10th consecutive quarter of positive adjusted EBITDA, reaching $3.5 million or 7.4% of revenue, exceeding their guidance.

Expansion in Key Segments

All segments grew significantly, with glasses revenues growing 46% and contact lens revenues growing 32%.

Successful Autoship and Loyalty Programs

The Autoship program contributed nearly $6 million in revenue, up 11% year-over-year, and the KITS+ loyalty program showed strong early traction.

Negative Updates

Increased Marketing Expense

Marketing expenses increased slightly to 13.5% of revenue compared to 13% in the prior year, reflecting continued investment in customer acquisition.

Lower Average Order Value for New Customers

New customer acquisitions typically have a lower average order value, which can impact initial gross margin percentages.

Inventory Levels Higher Than Usual

Inventory levels were higher than expected due to caution regarding macroeconomic and supply chain volatility, though this is expected to normalize in future quarters.

Company Guidance

During the Kits Eyecare First Quarter 2025 Financial Results Conference Call, the company reported robust metrics underscoring its strong start to the year. Kits achieved record revenue of $46.6 million, representing a 34% increase year-over-year, with all key business segments growing over 30%. Specifically, glasses revenues surged by 46%, and contact lens revenues by 32%. The company also recorded its 10th consecutive quarter of positive adjusted EBITDA, reaching $3.5 million or 7.4% of revenue, surpassing their guidance. Gross profit grew by 53% year-over-year to $17.1 million, with a gross margin expansion of 460 basis points to 36.7%. Kits welcomed over 95,000 new customers, marking a 28% increase, while returning customers contributed 62% of total revenue. The Kits Autoship program generated nearly $6 million in revenue, highlighting its role as a critical revenue engine. Looking towards Q2, Kits projects revenue between $48 million to $50 million and an adjusted EBITDA margin of 3% to 5%, as they plan to invest in acquiring new customers and sustaining growth.

Kits Eyecare Financial Statement Overview

Summary

Kits Eyecare demonstrates strong financial health with impressive revenue growth and profitability improvements. The balance sheet shows low leverage and a solid equity position, while cash flow metrics confirm efficient cash management. However, there is room for improvement in operational efficiency and asset growth.

Income Statement

Positive

Kits Eyecare showed strong revenue growth over the past years, with a notable increase from $91.6M in 2022 to $171.2M TTM. The gross profit margin improved significantly, reaching 34.8% TTM, indicative of efficient cost management. Net profit margin improved to 2.7% TTM, demonstrating profitability turnaround. However, EBIT and EBITDA margins, though improving, remain modest, suggesting room for enhancing operational efficiency.

Balance Sheet

Positive

The company's balance sheet is stable, with a debt-to-equity ratio of 0.16 TTM, indicating low leverage. The equity ratio stands at 60.2% TTM, reflecting a solid capital structure. Return on equity improved to 7.6% TTM, showing effective use of equity capital. However, the total assets have been relatively stable, suggesting limited asset growth.

Cash Flow

Positive

Cash flow performance is robust, with a positive free cash flow of $6.3M TTM, indicating effective cash generation. Operating cash flow to net income ratio is 2.0 TTM, showing strong cash conversion. Free cash flow to net income ratio of 1.34 TTM further confirms efficient cash flow management. However, fluctuations in investing and financing cash flows suggest potential volatility in cash reserves.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	182.88M	159.34M	120.51M	91.64M	82.40M	75.22M
Gross Profit	65.18M	53.65M	40.79M	29.25M	20.89M	21.39M
EBITDA	9.37M	8.31M	1.86M	-721.00K	-14.68M	-1.80M
Net Income	3.77M	3.12M	-2.21M	-4.55M	-14.62M	-6.58M
Balance Sheet
Total Assets	94.26M	103.02M	87.64M	93.86M	90.94M	54.66M
Cash, Cash Equivalents and Short-Term Investments	18.11M	19.27M	16.04M	18.79M	20.50M	2.31M
Total Debt	7.72M	12.60M	15.39M	19.44M	22.94M	22.33M
Total Liabilities	35.09M	45.13M	36.20M	40.16M	36.16M	55.23M
Stockholders Equity	59.17M	57.89M	51.45M	53.71M	54.78M	-573.00K
Cash Flow
Free Cash Flow	5.48M	9.88M	1.84M	4.42M	-23.09M	3.96M
Operating Cash Flow	8.10M	13.04M	2.40M	4.68M	-19.46M	4.18M
Investing Cash Flow	-2.61M	-3.15M	-563.00K	-258.00K	-3.63M	-225.00K
Financing Cash Flow	-6.62M	-5.02M	-5.07M	-5.13M	41.48M	-4.84M

Kits Eyecare Technical Analysis

Technical Analysis Sentiment

Negative

Last Price15.47

Price Trends

50DMA

16.32

Negative

100DMA

14.98

Positive

200DMA

12.23

Positive

Market Momentum

MACD

-0.18

Positive

RSI

40.87

Neutral

STOCH

54.09

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:KITS, the sentiment is Negative. The current price of 15.47 is below the 20-day moving average (MA) of 16.19, below the 50-day MA of 16.32, and above the 200-day MA of 12.23, indicating a neutral trend. The MACD of -0.18 indicates Positive momentum. The RSI at 40.87 is Neutral, neither overbought nor oversold. The STOCH value of 54.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:KITS.

Kits Eyecare Peers Comparison

Overall Rating

UnderperformOutperform

Sector (61)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LNF	75 Outperform	1.98B	12.31	13.68%	2.94%	0.57%	8.54%
GBT	63 Neutral	419.14M	15.54	8.29%	2.78%	7.61%	1.71%
KITS	59 Neutral	C$514.18M	134.00	6.70%	―	35.02%	1471.05%
NTAR	52 Neutral	38.98M	-7.09	86.12%	―	-57.13%	85.06%
ECOM	49 Neutral	13.45M	-37.50	-2.04%	―	8.53%	98.44%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%

* Consumer Cyclical Sector Average

Performance Comparison

TSE:KITS

Kits Eyecare

15.47

5.98

63.01%

TSE:FTI

FTI Foodtech International

0.18

0.16

800.00%

TSE:GBT

BMTC Group Inc.

12.97

0.22

1.73%

TSE:LNF

Leon's Furniture

28.60

-0.20

-0.69%

NEXCF

NexTech AR Solutions

0.14

0.09

180.00%

TSE:ECOM

Emerge Commerce Ltd

0.09

0.05

125.00%

Kits Eyecare Corporate Events

Business Operations and StrategyFinancial Disclosures

Kits Eyecare Achieves Record Revenue and Sustained Growth in Q2 2025

Positive

Aug 5, 2025

Kits Eyecare Ltd. reported a record revenue of $49.6 million for the second quarter of 2025, marking a 31% year-over-year increase. The company also achieved its eleventh consecutive quarter of positive adjusted EBITDA, which improved to $2.6 million. This growth was driven by strong new customer acquisition and a significant increase in glasses revenue. Despite a net loss due to non-operating exchange losses, the company showed a robust operational performance with a 45.1% increase in gross profit, reflecting successful pricing and promotional strategies. Kits Eyecare is well-positioned for continued growth, with expectations of further revenue increases in the third quarter.

The most recent analyst rating on (TSE:KITS) stock is a Buy with a C$14.00 price target. To see the full list of analyst forecasts on Kits Eyecare stock, see the TSE:KITS Stock Forecast page.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

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.Date of analysis: Sep 21, 2025