National Vision (EYE) Q2 Earnings Top Mark, Revenue View Cut

National Vision Holdings, Inc. EYE delivered adjusted earnings per share (EPS) of 21 cents for the second quarter of 2022, reflecting a significant year-over-year decline from the year-ago reported figure of 48 cents. The figure, however, surpassed the Zacks Consensus Estimate of 8 cents.

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

GAAP EPS for the quarter was 12 cents compared with the year-ago earnings per share of 42 cents.

Revenues in Detail

Revenues in the second quarter totaled $509.6 million, beating the Zacks Consensus Estimate by 1.3%. The top line however, declined 7.3% from the year-ago number. The decline in net revenues is attributable to the macroeconomic headwinds, constraints to exempt capacity and strong performance in the previous 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-eps-surprise-chart | National Vision Holdings, Inc. Quote

In the second quarter, comparable store sales declined 11%. Adjusted comparable store sales plunged 12.4%. National Vision opened 22 new stores, including two more eyeglass world locations to reach a store count of 1,314 at the end of the quarter. Overall, the store count grew 5.2% year over year.

The company plans to open at least 80 stores in 2022, and currently has a solid pipeline of specific locations for 2022 and into 2023.

Margins

Gross profit in the reported quarter was $274.9 million, down 12.2% from the prior-year quarter. The gross margin of 53.9% contracted 309 basis points (bps).

Meanwhile, selling, general and administrative expenses fell 2.7% to $227.8 million. Adjusted operating margin was 9.3%, down 518 bps year over year.

Financial Position

National Vision exited the second quarter of 2022 with cash and cash equivalents of $254.4 million compared with $314.6 million at the end of Q1.

Cumulative net cash flow from operating activities at the end of the quarter was $88 million compared with $189.8 million a year ago.

2022 Outlook

National Vision updated its 2022 guidance.

For 2022, net revenues are expected in the range of $1.99-$2.02 billion (down from the prior-estimate of $2.01-$2.07 billion).

Adjusted earnings per share are estimated in the band of 65-77 cents (narrower than the prior-estimated $65-80). The Zacks Consensus Estimate for the same is currently pegged at 70 cents.

Adjusted comparable store sales growth is expected in the range of (6.5%)-(8%), down from the earlier projected range of (4%)-(7%).

Our Take

National Vision reported better-than-expected earnings and revenues for the second quarter of 2022. However, on a year-over-year basis, the company reported a significant decline in those numbers. According to the company, it is facing demand headwinds across its network of stores, given the current macro environment, as well as a supply challenge in a smaller subgroup of stores due to the constraints on exam capacity. Contraction of both margins on escalating expenses is discouraging. The company’s lowered revenue outlook and a slash in the upper end of the adjusted EPS outlook for 2022 raises apprehension.

On a positive note, the company’s second-quarter results benefited from new store openings in America's Best and Eyeglass World brands.

Zacks Rank & 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 Quest Diagnostics Inc. DGX, Molina Healthcare, Inc. MOH and Merck & Co. MRK.

Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quest Diagnostics has an earnings yield of 6.9% compared with the industry’s 3.9%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.

Molina Healthcare, having a Zacks Rank #2, reported second-quarter 2022 adjusted EPS of $4.55, which beat the Zacks Consensus Estimate by 4.8%. Revenues of $8.1 billion outpaced the consensus mark by 6.2%.

Molina Healthcare has a long-term estimated growth rate of 16.4%. MOH’s earnings surpassed estimates in the trailing four quarters, the average being 3.2%.

Merck reported second-quarter 2022 adjusted earnings of $1.87 per share, beating the Zacks Consensus Estimate of $1.67. Revenues of $14.6 billion surpassed the Zacks Consensus Estimate by 5.4%. It currently has a Zacks Rank #2.

Merck has a long-term estimated growth rate of 10.1%. MRK’s earnings surpassed estimates in the trailing four quarters, the average surprise being 16.8%.

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