National Vision Holdings, Inc. EYE is winning market shares across four sub segments of the Owned and Host. The company is also advancing its transformation efforts with continued expansion of exam capacity, new traffic-driving initiatives and initiatives to strengthen its business foundation for profitable growth. Additionally, National Vision will also capitalize on the favorable trends within the U.S. optical retail industry, which is encouraging. Meanwhile, the mounting expenses and high dependence on vendors significantly might hurt National Vision’s sales.

In the past year, this Zacks Rank #3 (Hold) stock has declined 48.2% against the 6.2% growth of the industry and a 24.4% rise of the S&P 500 composite.

The leading optical retailer has a market capitalization of $1.58 billion. National Vision surpassed estimates in three of the trailing four quarters and missed in one, delivering an earnings surprise of 93.7%, on average.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Upsides for National Vision Stock

Owned & Host Gaining Market Share: All four sub-segments within Owned and Host are consistently gaining market share, banking on several growth drivers. America's Best is particularly driving revenues, banking on the ongoing strength in managed care. Recently, the brand introduced the Wide Buys promotion to enhance value offerings and attract new customers. Also, in third-quarter 2024, 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.

National Vision is deploying remote medicine technology in tandem with electronic health record technology to drive expanded capacity, improve in-store efficiencies and improve the patient experience. The combination of these initiatives is resulting in added exam capacity in sales that the company would not have had otherwise. On top of that, the company expanded its hybrid remote pilot to 16 stores where optometrists remotely perform exams in other stores, based on availability and demand. This approach is expected to generate systemic enhancements for the company.

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Future Strategies Look Promising: National Vision recently completed a comprehensive store fleet review to align its real estate investments with higher standards, optimize profitability for the long term and improve the overall health of the core business. The results of this review include a plan to close 39 stores through 2026, which is expected to deliver approximately $4 million in adjusted EBITDA improvement by the end of that year.

Additionally, National Vision temporarily moderated new openings to 30-35 America’s Best stores in fiscal 2025, mostly in remote-enabled states. Through these actions, the company expects to gain more flexibility to invest in the existing operations and deploy capital to initiatives that drive revenue growth and improve profitability. The company is also leveraging its omnichannel capabilities by testing and advancing programs that attract consumers across omnichannel offerings.

Favorable Industry Trends: Per a 2023 report by The Vision Council, 82% of respondents use a form of vision correction — including glasses, prescription sunglasses, reading glasses and contact lenses; 69% use prescription eyewear — including glasses, sunglasses and contact lenses; and 68% use some form of non-prescription eyewear — including plano sunglasses, blue light glasses, reading glasses and non-prescription contact lenses.

Another report from WHO in 2023 states 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. Another trending factor is the frequent replacement cycle, marked by the repetitive and foreseeable nature of customer behavior, resulting in a substantial volume of recurring revenues for the optical retail industry.

Downsides for National Vision Stock

Mounting Expenses: Over the past few years, global markets and economic conditions have been challenging, particularly in light of rising interest rates and historic inflation throughout 2023 and global conflict, which has created continued economic uncertainty. In this regard, the company made targeted wage investments, including increasing compensation for optometrists and associates, as well as flexibility initiatives, which have and will continue to impact costs related to revenues, such as selling, general and administrative expenses.

High Dependence on Vendors: National Vision procures almost all its merchandise from domestic and international vendors. Moreover, the company has ties with a limited number of suppliers for most of its eyeglass frames, eyeglass lenses and contact lenses. Thus, high dependence on a limited number of suppliers exposes it to concentration of supplier risk.

EYE Stock Estimate Trend

The Zacks Consensus Estimate for National Vision’s 2024 earnings per share (EPS) has remained constant at 49 cents in the past 30 days.

The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $1.84 billion. This suggests a 13.3% decline from the year-ago reported number.

Top MedTech Stocks

Some better-ranked stocks in the broader medical space are Veracyte VCYT, Haemonetics HAE and Phibro Animal Health PAHC. 

Veracyte has estimated 2024 earnings growth rate of 37.2% compared with the industry’s 15.3%. Veracyte’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 520.6%. Its shares have risen 44.5% compared to the industry’s 3.6% growth in the past year.

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

Haemonetics, carrying a Zacks Rank #2 (Buy) at present, has estimated fiscal 2025 earnings growth rate of 15.9% compared with the industry’s 12.3%. Shares of the company have lost 8.3% against the industry’s 9.7% growth. HAE’s earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, with the average surprise being 2.82%.

Phibro Animal Health, carrying a Zacks Rank #2 at present, has estimated earnings growth rate of 35.3% for fiscal 2025 compared with the industry’s 11.1%. Shares of the company have risen 77.6% compared with the industry’s 9.8% growth over the past year. PAHC’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 25.47%.

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