Eye-care specialist TLC Vision (NASDAQ:TLCV) reports its Q4 and full-year 2005 earnings Monday afternoon, but Mr. Market isn't particularly impressed with what he sees so far.

What analysts say:

  • Buy, sell, or waffle? TLC's getting more TLC from Wall Street than it received two months ago. Two new analysts have come on board, bringing the ratings tally up to one buy, one sell, and six holds.
  • Revenues. Analysts believe that Q1 sales beat out last year's results by 16%. $82.6 million is the target.
  • Earnings. Regardless, profits per diluted share are believed to have declined 37%, to $0.10 per share.

What management says:
Reviewing TLC's performance in fiscal 2005, CEO Jim Wachtman characterized his company's growth as "stable" and "broad-based" but described the company's LASIK business as experiencing "uneven demand."

What management does:
"Uneven." Vague as the word is (like "stable" and "broad-based," for that matter), it accurately describes what's been going on not just with LASIK demand, but with TLC's profitability in providing it. Gross margins continue to slip, operating margins continue to decline, and the company's rolling net margin -- as we predicted last quarter -- fell off a cliff as soon as the effects of the December 2004 quarter's $26 million one-time gain rolled off the edge of the trailing-12-month results.

Margins %

9/04

12/04

3/05

6/05

9/05

12/05

Gross

30.8

30.9

32.2

31.9

31.8

30.5

Op.

10.8

1

10.6

8.8

6.7

5.1

Net

6.1

17.7

18.2

17.8

17.1

2.6
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ending in the named months.

One Fool says:
There's a bit of good news at TLC, however. The company's AMD division, meaning its majority investment in Canada's unprofitable OccuLogix (NASDAQ:RHEO), is about to get a lift as a result of TLC's sale of 800,000 shares of Occulogix some time prior to April. Depending on when the shares were actually disposed of, this sale should generate in excess of $2 million in cash for TLC either in this quarter or Q2. It will also permit TLC to cease consolidating Occulogix's losses with its own financial reporting, perhaps boosting TLC's net margins, and also making it easier for investors to see how the core LASIK business is doing, independent of OccuLogix's troubles.

Competitors:

  • Advanced Medical Optics (NYSE:EYE)
  • LCA-Vision (NASDAQ:LCAV)
  • NovaMed (NASDAQ:NOVA)
  • Orion HealthCorp (AMEX:ONH)
  • United Surgical Partners (NASDAQ:USPI)

Fool contributor Rich Smith does not own shares of any company named above.