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

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Zacks Equity Research
·4 min read
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National Vision Holdings Inc. EYE delivered adjusted earnings per share (“EPS”) of 45 cents for the fourth quarter of 2020, a significant rise of 9 cents from the prior-year quarter. The figure exceeded the Zacks Consensus Estimate by a stupendous 246.2%.

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 42 cents a share compared to 5 cents in the year-earlier quarter.

Full-year adjusted EPS was 91 cents, reflecting a 21.3% increase from the year-ago period. Again, the metric surpassed the Zacks Consensus Estimate by 68.5%.

Revenues in Detail

Revenues in the fourth quarter totaled $496.7 million, beating the Zacks Consensus Estimate by 5.9%. The top line improved 23.6% from the year-ago number. The company noted that net revenue growth was positively impacted by 8% due to the timing of unearned revenues.

In the fourth quarter, comparable store sales growth was 3% whereas Adjusted Comparable Store Sales Growth was 10.6%.

National Vision opened five new stores in fourth-quarter 2020 and closed one to reach 1,205 stores at the end of the fourth quarter. Overall, store count grew 4.7% year over year.

Full-year revenues were $1.71 billion, reflecting a 0.7% dip from the year-ago period. Again, the metric exceeded the Zacks Consensus Estimate by 1.2%.

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

Margins

Gross profit in the reported quarter was $280.2 million, up 30.8% from the prior-year quarter. Gross margin of 56.4% expanded 310 basis points (bps).

Meanwhile, selling, general and administrative expenses increased by 12.2% to $199.8 million. Adjusted operating margin was 16.2%, implying a 720-bps expansion year over year.

Financial Position

National Vision exited 2020 with cash and cash equivalents of $373.9 million compared with $39.3 million at the end of 2019.

Cumulative net cash flow from operating activities at the end of 2020 was $234.9 million compared with $165.1 million a year ago.

2021 Outlook

National Vision, despite the pandemic-led uncertainties, has provided its 2021 guidance.

Net revenues are expected in the range of $1.93-$1.98 billion. The Zacks Consensus Estimate for the same is currently pegged at $1.94 billion.

Adjusted EPS is projected in the band of 88-93 cents. The Zacks Consensus Estimate for the same is currently pegged at 81 cents.

Adjusted Comparable Store Sales Growth is expected to be within 13-16%.

Our Take

National Vision exited the fourth quarter with better-than-expected results despite coronavirus-led economic effects. The company witnessed comparable growth on increased customer transaction in the quarter. The company recorded positive comps in eyeglasses and contact lens, with strong performance in the former. Eyeglass comps were driven by increases in both customer transactions and average ticket, especially at the company’s growth brands. The extension of National Vision’s partnership with Walmart through 2024 looks encouraging. Expansion of both margins bodes well.

However, the company’s operation in a tough competitive space, along with its high dependence on vendors, is worrying.

Zacks Rank and Key Picks

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

Some better-ranked stocks in the broader medical space are Abbott Laboratories ABT, Hologic, Inc. HOLX and IDEXX Laboratories, Inc. IDXX.

Abbott reported fourth-quarter 2020 adjusted EPS of $1.45, which surpassed the Zacks Consensus Estimate by 6.6%. Fourth-quarter worldwide sales of $10.7 billion outpaced the consensus mark by 7.9%. The company currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hologic reported first-quarter fiscal 2021 adjusted EPS of $2.86, beating the Zacks Consensus Estimate by 33.6%. The company currently carries a Zacks Rank #2.

IDEXX reported fourth-quarter 2020 adjusted EPS of $2.01 which surpassed the Zacks Consensus Estimate by 40.6%. Revenues of $720.9 million beat the consensus mark by 5.8%. The company currently carries a Zacks Rank #2.

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