Please ensure Javascript is enabled for purposes of website accessibility

Why National Vision Holdings Stock Popped 15% Today

By Rich Smith – Nov 7, 2019 at 11:44AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The company just earned 50% more than analysts had predicted.

What happened

Eyeglasses and contact lens retailer National Vision Holdings (EYE -1.47%) reported its Q3 2019 earnings this morning, beating estimates soundly and sending its stock up 15.1% as of 11:20 a.m. EST on Thursday.  

Heading into earnings, analysts had predicted National Vision would report $0.12 per share in adjusted (i.e., pro forma) profit on $427.7 million in sales, but it beat those estimates handily. Earnings came in 50% higher than expected at $0.18 per share on sales of $431.9 million, a beat on both the top and bottom lines.  

Man lifts sunglasses from eyes in surprise

Image source: Getty Images.

So what

Sales for the quarter were up 11.5% year over year, and adjusted net income grew 65.8%. But viewed from another perspective, earnings weren't great. When calculated according to generally accepted accounting principles (GAAP), they were only $0.01 per share -- down from $0.06 a year ago.

Still, most of that reduction owed to smaller tax benefits recorded this quarter than a year ago, and with Wall Street focusing on adjusted results, investors are interpreting this quarter as a win for National Vision -- and the future looks pretty good as well.

Now what

Updating its guidance in light of the Q3 results, and factoring in store sales growth that is now greater than expected, National Vision forecasts that its full-year sales will range from $1.705 billion to $1.712 billion. The low end of this range now matches the high end of the company's previous guidance. Similarly, the company believes it will match or exceed previous guidance for earnings.

With management's new forecast for full-year adjusted net income running from $56.5 million to $58.5 million, it looks like National Vision is setting itself up to beat earnings once again in Q4.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.