Results: National Vision Holdings, Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

Shareholders of National Vision Holdings, Inc. (NASDAQ:EYE) will be pleased this week, given that the stock price is up 11% to US$44.77 following its latest quarterly results. Revenues were US$485m, approximately in line with whatthe analysts expected, although statutory earnings per share (EPS) crushed expectations, coming in at US$0.42, an impressive 82% ahead of estimates. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we gathered the latest post-earnings forecasts to see what estimates suggest is in store for next year.

See our latest analysis for National Vision Holdings

After the latest results, the eleven analysts covering National Vision Holdings are now predicting revenues of US$1.93b in 2021. If met, this would reflect a meaningful 19% improvement in sales compared to the last 12 months. Per-share earnings are expected to leap 972% to US$0.68. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$1.92b and earnings per share (EPS) of US$0.62 in 2021. So the consensus seems to have become somewhat more optimistic on National Vision Holdings' earnings potential following these results.

The consensus price target rose 17% to US$47.42, suggesting that higher earnings estimates flow through to the stock's valuation as well. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on National Vision Holdings, with the most bullish analyst valuing it at US$53.00 and the most bearish at US$35.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await National Vision Holdings shareholders.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. The analysts are definitely expecting National Vision Holdings' growth to accelerate, with the forecast 19% growth ranking favourably alongside historical growth of 9.3% per annum over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 9.3% next year. Factoring in the forecast acceleration in revenue, it's pretty clear that National Vision Holdings is expected to grow much faster than its industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around National Vision Holdings' earnings potential next year. Fortunately, they also reconfirmed their revenue numbers, suggesting sales are tracking in line with expectations - and our data suggests that revenues are expected to grow faster than the wider industry. There was also a nice increase in the price target, with the analysts clearly feeling that the intrinsic value of the business is improving.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for National Vision Holdings going out to 2024, and you can see them free on our platform here.

And what about risks? Every company has them, and we've spotted 5 warning signs for National Vision Holdings (of which 1 is concerning!) you should know about.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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