Is it the Right Time to Add EYE Stock to Your Portfolio Now?

National Vision Holdings, Inc. EYE is strengthening its foundation with leadership changes, expanded exam capacity and other strategic initiatives. Favorable optical retail industry statistics bode well for the company’s growth potential in the upcoming quarters. Furthermore, America's Best brand is boosting revenues, leveraging the ongoing strength of managed care. Meanwhile, a negative solvency position poses concerns for National Vision’s operations.

Year to date, this Zacks Rank #2 (Buy) company’s shares have risen 4.4% against the industry’s 3.1% decline and the S&P 500 composite’s 14.3% fall.

The leading optical retailer has a market capitalization of $894.19 million. National Vision beat on earnings in each of the trailing four quarters, delivering an average surprise of 79.29%.

Tailwinds for EYE

Owned & Host Gaining Market Share: The company’s America’s Best is particularly driving revenues on the back of its ongoing strength in Managed Care. During 2024, the brand introduced the Wide Buys promotion to enhance value offerings and attract new customers. Also, America’s Best became the exclusive U.S. retail partner of the Florence by Mills eyewear collection and launched an exclusive partnership with Pair Eyewear nationwide. 

In 2024, Eyeglass World underwent several strategic changes on a path toward stabilization, leveraging successful strategies from America's Best. Additionally, National Vision launched its hybrid remote pilot during the year, enabling in-store optometrists to conduct exams in other stores based on availability and demand.

Favorable Industry Trends: National Vision operates in the U.S. optical retail industry, demonstrating consistent growth and resilience to economic cycles, largely due to medical, nondiscretionary and recurring eye care purchases. According to a 2023 report by the Vision Council, 82% of respondents use a form of vision correction, 69% use prescription eyewear and 68% use some form of non-prescription eyewear. Further, a 2023 WHO report stated that nearly 2.2 billion individuals around the globe have a vision impairment, of which 1 billion have a vision impairment that is yet to be addressed.

Cataract, refractive error, age-related macular degeneration, glaucoma and diabetic retinopathy are the leading causes of distance vision impairment or blindness, while presbyopia mainly causes near vision impairment. Another trending factor is the frequent replacement cycle marked by the repetitive and foreseeable nature of customer behavior, which results in a substantial volume of recurring revenues for the optical retail industry.

Future Strategies Look Promising: National Vision is advancing its transformation efforts with new additions to the leadership team, continued expansion of exam capacity, new traffic-driving initiatives and efforts to strengthen its business foundation for profitable growth. The company continues to digitize its stores and corporate office, investing in a finance ERP (enterprise resource planning), which will go live in the second quarter of 2025, and a new Adobe CRM (customer relationship management) platform later this year. To strengthen its omnichannel experience, it is also investing in upgrading the e-commerce platform.

Furthermore, the company is committed to maintaining a healthy store fleet, while focusing on driving improved comparable store sales growth. Following a comprehensive review of the store fleet, National Vision plans to take action on 43 stores through fiscal 2026 to improve the underlying foundation of the core business. 

Headwinds for EYE

Solvency and Capital Structure: EYE exited the fourth quarter with cash and cash equivalents of $73.9 million and short-term debt of $101.4 million on its balance sheet. This is not good news for the company’s solvency position, particularly during macroeconomic headwinds when it is majorly facing supply issues globally. National Vision’s debt-to-capital ratio was 30%, reflecting a modest 0.4% increase sequentially.

EYE Stock Estimate Trend

The Zacks Consensus Estimate for National Vision’s 2025 earnings per share (EPS) has remained unchanged at 55 cents in the past 30 days.

The Zacks Consensus Estimate for 2025 revenues is pegged at $1.92 billion, suggesting a 2.2% improvement from the year-ago reported number.

Other Key Picks

Some other top-ranked stocks in the broader medical space are Phibro Animal Health PAHC, Boston Scientific BSX and Cardinal Health CAH.

Phibro Animal Health has an estimated fiscal 2025 earnings growth rate of 62.2% compared with the industry’s 17.2%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 27.06%. The company’s shares have surged 73.5% compared with the industry’s 9.5% growth in the past year.

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

Boston Scientific, carrying a Zacks Rank #2 at present, has an earnings yield of 2.7% compared with the industry’s 1.5%. Shares of the company have rallied 47.1% compared with the industry’s 9.5% growth. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.25%.

Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 10.7% compared with the industry’s 9.5%. Shares of the company have rallied 17.5% against the industry’s 3.2% decline. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.64%.

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This article originally published on Zacks Investment Research (zacks.com).

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