National Vision (EYE) Tops Q1 Earnings Estimates, Cuts '22 View

National Vision Holdings, Inc. EYE delivered adjusted earnings per share (EPS) of 33 cents for the first quarter of 2022, reflecting a decline of 31.3% from the year-ago 48 cents. However, the figure surpassed the Zacks Consensus Estimate by 22.2%.

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 34 cents compared with the year-ago earnings per share of 48 cents, reflecting a 29.2% decline.

Revenues in Detail

Revenues in the first quarter totaled $527.7 million, lagging the Zacks Consensus Estimate by 4.1%. The top line declined 1.2% from the year-ago number. The decline in net revenues is attributable to the omicron impact, macroeconomic headwinds, constraints to exam 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 first quarter, comparable store sales growth declined 4.9%, whereas adjusted comparable store sales growth plunged 6.8%. National Vision opened 17 new stores and closed three stores to reach a store count of 1,292 at the end of the quarter. Overall, the store count grew 5% year over year.

Margins

Gross profit in the reported quarter was $291.7 million, down 5.8% from the prior-year quarter. Gross margin of 55.3% contracted 267 basis points (bps).

Meanwhile, selling, general and administrative expenses increased 2.2% to $228.6 million. Adjusted operating margin was 11.9%, contracted 412 bps year over year.

Financial Position

National Vision exited the first quarter of 2022 with cash and cash equivalents of $314.6 million compared with $305.8 million at the end of 2021.

Cumulative net cash flow from operating activities at the end of the quarter was $47.1 million compared with $97.7 million a year ago.

2022 Outlook

National Vision has updated its 2022 guidance.

For 2022, net revenues are expected in the range of $2.01-$2.07 billion (down from the prior-estimated $2.12-$2.17 billion). The Zacks Consensus Estimate for the same is currently pegged at $2.16 billion.

Adjusted earnings per share are estimated in the band of 65-80 cents (down from the prior-estimated $1.03-$1.10). The Zacks Consensus Estimate for the same is currently pegged at $1.07.

Adjusted comparable store sales growth is expected in the range of (7%)-(4%), down from the earlier projected range within (1%)-1.5%.

Our Take

National Vision reported better-than-expected earnings for the first quarter of 2022.The company’s first-quarter results benefitted from pent-up demand from store closures. The timing of unearned revenues resulting from the volume of sales in the final week of the reported quarter also aided top-line performance. The notable store count growth for America's Best and Eyeglass World brands instills optimism. An increase in short-term cash level is promising too.

However, revenues for the first quarter missed the Zacks Consensus Estimate and declined year over year. Contraction of both margins on escalating expenses is discouraging. The company’s lowered outlook for 2022 raises apprehension. Further, the ongoing headwinds related to inflationary pressure and weaker consumer confidence continue to pose challenges.

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 Alkermes plc ALKS, Medpace Holdings, Inc. MEDP and UnitedHealth Group Incorporated UNH.

Alkermes reported first-quarter 2022 adjusted EPS of 12 cents, which surpassed the Zacks Consensus Estimate of a penny. Revenues of $278.6 million outpaced the Zacks Consensus Estimate by 6.2%. Alkermes currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alkermes has an estimated long-term growth rate of 25.1%. ALKS’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%.

Medpace reported first-quarter 2022 adjusted EPS of $1.69, which surpassed the Zacks Consensus Estimate by 34.1%. Revenues of $330.9 million outpaced the Zacks Consensus Estimate by 1.1%. It currently has a Zacks Rank #2 (Buy).

Medpace has a historical growth rate of 27.3%. MEDP’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.1%.

UnitedHealth, having a Zacks Rank #2, reported first-quarter 2022 adjusted EPS of $5.49, which beat the Zacks Consensus Estimate by 1.7%. Revenues of $80.1 billion outpaced the consensus mark by 1.9%.

UnitedHealth has an estimated long-term growth rate of 14.8%. UNH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 3.7%.

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