Why Is National Vision (EYE) Up 2.2% Since Last Earnings Report?
A month has gone by since the last earnings report for National Vision (EYE). Shares have added about 2.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is National Vision due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
National Vision Q4 Earnings Top Estimates, Margins Up
National Vision delivered adjusted earnings per share 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 earnings per share for the quarter was 42 cents a share compared to 5 cents in the year-earlier quarter.
Full-year adjusted earnings per share 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%.
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 earnings per share are 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%.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision. The consensus estimate has shifted 12.5% due to these changes.
VGM Scores
At this time, National Vision has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, National Vision has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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