It has been about a month since the last earnings report for National Vision (EYE). Shares have lost about 7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is National Vision due for a breakout? 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 catalysts.
National Vision’s Q4 Revenues Up on Comparable Store Sales
National Vision posted fourth-quarter fiscal 2018 adjusted earnings per share (EPS) of a penny, which missed the Zacks Consensus Estimate of 2 cents. However, the figure compared favorable with the year-ago loss of 5 cents.
Adjusted EPS in 2018 was 66 cents, up 29.4% year over year.
Revenues in Detail
Revenues in the quarter totaled $355.9 million, beating the Zacks Consensus Estimate by 2.9%. Moreover, revenues rose 10.6% from the year-ago quarter.
Revenues in 2018 came in at $1.54 billion, up 11.6% year over year.
Per management, new store and comparable store sales growth primarily led the top-line performance in fourth-quarter fiscal 2018. Moreover, National Vision’s extended contact lens distribution association with Walmart (NYSE:WMT) contributed more than $9 million to net revenues or roughly 290 basis points (bps) to net revenue growth.
Comparable store sales growth increased 4.3% year over year. Moreover, the company witnessed a 2.9% year-over-year rise in adjusted comparable store sales growth. The upside was led by rising average ticket and customer transactions.
Business Development
National Vision opened 16 new stores and closed one in fourth-quarter 2018. The company exited the quarter with 1,082 stores.
Margin Details
Gross margin contracted 130 bps year over year to 51.3% in the quarter under review, mainly led by the new business mix.
Selling, general and administrative expenses rose 8.7% year over year to $166.1 million. Adjusted operating margin (without including depreciation and amortization, asset impairment and litigation settlement expenses) declined 60 bps to 4.6% from the year-ago quarter.
Financial Details
National Vision exited 2018 with cash and cash equivalents of $17.1 million, compared with $4.2 million in 2017. In 2018, net cash provided by operating activities was $106.6 million compared with $90.3 million a year ago.
Guidance Issued
For 2019, the company issued revenue growth guidance of $1.675-$1.705 billion. Notably, the guidance includes an estimated $20-25 million in incremental net revenue from the extended contact lens distribution association with Walmart. The Zacks Consensus Estimate for the same is pegged at $1.70 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -17.1% due to these changes.
VGM Scores
Currently, National Vision has a subpar Growth Score of D, though it is lagging a bit on the Momentum Score front with an F. However, 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 F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, National Vision has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
National Vision Holdings, Inc. (EYE): Free Stock Analysis Report
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