National Vision Holdings, Inc.'s (NASDAQ:EYE) latest earnings announcement in December 2018 indicated that the business faced a major headwind with earnings deteriorating by -45%. Below is my commentary, albeit very simple and high-level, on how market analysts predict National Vision Holdings's earnings growth trajectory over the next few years and whether the future looks brighter. I will be using net income excluding extraordinary items in order to exclude one-off volatility which I am not interested in.
Market analysts' prospects for the upcoming year seems rather muted, with earnings expanding by a single digit 8.9%. The growth outlook in the following year seems much more buoyant with rates generating double digit 45% compared to today’s earnings, and finally hitting US$38m by 2022.
While it is useful to be aware of the growth rate year by year relative to today’s value, it may be more beneficial to evaluate the rate at which the earnings are rising or falling every year, on average. The benefit of this approach is that we can get a bigger picture of the direction of National Vision Holdings's earnings trajectory over the long run, irrespective of near term fluctuations, which may be more relevant for long term investors. To calculate this rate, I've inserted a line of best fit through the forecasted earnings by market analysts. The slope of this line is the rate of earnings growth, which in this case is 17%. This means, we can expect National Vision Holdings will grow its earnings by 17% every year for the next few years.
For National Vision Holdings, there are three relevant aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Future Earnings: How does EYE's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of EYE? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.