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National Vision (EYE) Q4 Earnings Top Estimates, Margins Down

·4 min read

National Vision Holdings Inc. EYE delivered adjusted earnings per share (EPS) of 13 cents for the fourth quarter of 2021, reflecting a decline of 71.1% from the year-ago 45 cents. However, the figure compared favorably with the Zacks Consensus Estimate of a loss of 2 cents.

The adjustment excludes the impact of certain non-recurring charges like asset impairment, amortization of acquisition intangibles and stock compensation expenses, among others.

GAAP EPS for the quarter was 7 cents compared with the year-ago EPS of 42 cents, reflecting an 83.3% decline.

For the full year, adjusted earnings were $1.48, reflecting an increase of 62.6% from the year-ago period. The metric surpassed the Zacks Consensus Estimate by 13.8%.

Revenues in Detail

Revenues in the fourth quarter totaled $477.9 million, beating the Zacks Consensus Estimate by 4.4%. The top line declined 3.8% from the year-ago number. The company noted that net revenues were negatively impacted by 1.4% due to the timing of unearned revenues.

In the fourth quarter, comparable store sales growth was 1.7%, whereas adjusted comparable store sales growth was 1.2%. Also, National Vision opened 16 new stores to reach a store count of 1,278 at the end of the quarter. Overall, the store count grew 6.1% year over year.

National Vision Holdings, Inc. Price, Consensus and EPS Surprise

National Vision Holdings, Inc. Price, Consensus and EPS Surprise
National Vision Holdings, Inc. Price, Consensus and EPS Surprise

National Vision Holdings, Inc. price-consensus-eps-surprise-chart | National Vision Holdings, Inc. Quote

Full-year revenues were $2.08 billion, reflecting a 21.5% increase from the year-ago period. Revenues beat the Zacks Consensus Estimate by 1.5%. The company noted that net revenues were positively impacted by 0.4% due to the timing of unearned revenues.

Margins

Gross profit in the reported quarter was $260.2 million, down 7.2% from the prior-year quarter. Gross margin of 54.5% contracted 197 basis points (bps).

Meanwhile, selling, general and administrative expenses increased 12.5% to $224.8 million. Adjusted operating margin was 7.4%, contracted 878 bps year over year.

Financial Position

National Vision exited 2021 with cash and cash equivalents of $305.8 million compared with $373.9 million at the end of 2020.

Cumulative net cash flow from operating activities at the end of 2021 was $258.9 million compared with $234.9 million a year ago.

2022 Outlook

National Vision initiated its 2022 guidance.

For 2022, net revenues are expected in the range of $2.12-$2.17 billion. The Zacks Consensus Estimate for the same is currently pegged at $2.21 billion.

Adjusted EPS is estimated in the band of $1.03-$1.10. The Zacks Consensus Estimate for the same is currently pegged at $1.25.

Adjusted comparable store sales growth is expected within (1%)-1.5%.

Our Take

National Vision reported better-than-expected results for fourth-quarter 2021. The top-line strength was led by growth in America’s Best and Eyeglass World brands. The company witnessed comparable growth on increased customer transactions in the reported quarter. Despite the challenging business environment, the company has provided bullish 2022 guidance. However, escalating expenses are building pressure on the bottom line. The contraction of both margins is discouraging. The company’s operation in a tough competitive space and its high dependence on vendors are also worrying.

Zacks Rank and Key Picks

National Vision currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space that have announced quarterly results are McKesson Corporation MCK, Henry Schein, Inc. HSIC and Bio-Rad Laboratories, Inc. BIO.

McKesson, carrying a Zacks Rank #2 (Buy), reported third-quarter fiscal 2022 adjusted EPS of $6.15, which beat the Zacks Consensus Estimate of $5.38 by 14.3%. Revenues of $68.61 billion surpassed the Zacks Consensus Estimate by 3.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 58.3% compared with the industry’s 10.8% growth in the past year.

Henry Schein, carrying a Zacks Rank #1, reported fourth-quarter 2021 adjusted EPS of $1.07, which beat the Zacks Consensus Estimate by 18.9%. Revenues of $3.33 billion outpaced the consensus mark by 4.7%.

Henry Schein has an estimated long-term growth rate of 11.8%. HSIC surpassed earnings estimates in each of the trailing four quarters, the average surprise being 25.5%.

Bio-Rad reported fourth-quarter 2021 adjusted EPS of $3.21, which surpassed the Zacks Consensus Estimate by 11.9%. Revenues of $732.8 million outpaced the Zacks Consensus Estimate by 0.5%. It currently has a Zacks Rank #2.

Bio-Rad has an earnings yield of 2.3%, which compares favorably with the industry’s negative yield. BIO surpassed earnings estimates in the trailing four quarters, the average surprise being 66.9%.


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