National Vision Gains 166.5% in a Year: What's Driving the Rally?

National Vision EYE has witnessed strong momentum over the past year. Shares of the company have risen 166.5%, outperforming the industry’s 13.3% decline during the same time frame. The S&P 500 composite has increased 18.2%.With healthy fundamentals and strong growth opportunities, this Zacks Rank #3 (Hold) company appears to be a solid wealth creator for its investors at the moment.National Vision is a major optical retailer in the United States. As of June 28, 2025, the company operated through a diverse portfolio of 1,240 retail stores across four brands, along with associated omnichannel consumer websites. National Vision operates through one reportable segment, Owned & Host, which includes two owned brands — America’s Best Contacts and Eyeglasses (America’s Best) and Eyeglass World. Factors Favoring EYE’s Share Price GrowthNational Vision’s share price is trending upward, prompted by its ongoing strategic transformation. According to management, the transformation initiatives are gaining traction and the strategic focus on key customer segments is driving improvement in its comparable sales.  The company recently rolled out its refreshed branding and is preparing to unveil a major identity overhaul for America’s Best. At Eyeglass World, National Vision recently made the strategic decision to modify the doctor model in Florida to enhance patient experience and provide greater access to care. Additionally, it has advanced its transformation efforts by bringing in new leadership to execute a multi-year strategic plan, most recently onboarding a new CFO. A solid second-quarter performance is also expected to contribute further.Investors are currently focused on the growth of the company’s Owned & Host segment, which continues to benefit from positive comparable store sales and new store openings. Strengthening its market position, America’s Best became the exclusive U.S. retail partner for the Florence by Mills eyewear collection and launched an exclusive nationwide partnership with Pair Eyewear. To further drive growth, the company is expanding exam capacity through remote capabilities, with about two-thirds of its stores now equipped with remote technology. In the second quarter, remote exam technology reached a major milestone, with over 1 million exams conducted.Meanwhile, National Vision’s raised fiscal 2025 outlook looks encouraging. Fiscal 2025 revenues are now expected to be in the range of $1.93-$1.97 billion (up from $1.92-$1.95 billion). Adjusted EPS is now estimated to be in the band of 62-70 cents (up from 59-67 cents). Image Source: Zacks Investment ResearchOperationally, in the second quarter, gross margin expanded 2166 basis points (bps) despite a 3.5% rise in the cost of revenues. Also, the operating margin expanded 206 bps. These factors have positively impacted the stock, contributing to its rise. Factors That May Offset EYE’s GainsEYE’s business remains vulnerable to growing geopolitical complexities, supply-chain disruptions, shortages of healthcare staff and volatility in capital markets. Additionally, the ongoing changes in U.S. trade policy and retaliatory tariffs look discouraging. All these factors continue to weigh on its profitability. In the second quarter of 2025, SG&A expenditures rose 6.8% year over year.From a solvency viewpoint, National Vision has a significant amount of indebtedness. It exited the second quarter of 2025 with cash and cash equivalents of $48 million, and short-term debt of $17 million. However, long-term debt was $256 million, much higher than cash levels. This leverage could have several consequences, including greater exposure to adverse economic, industry, or competitive developments.A Look at EYE’s EstimatesThe Zacks Consensus Estimate for 2025 EPS has remained unchanged at 68 cents in the past 30 days.The company has an estimated long-term EPS growth rate of 22.7% compared with the industry’s 12.9%. Stocks to ConsiderSome better-ranked stocks in the broader medical space are Masimo MASI, Phibro Animal Health PAHC and Envista NVST. While Masimo sports a Zacks Rank #1 (Buy), Phibro and Envista carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Masimo’s shares have jumped 18.9% in the past year. Estimates for the company’s 2025 EPS have increased 5.2% to $5.24 in the past 30 days. MASI’s earnings beat estimates in each of the trailing four quarters, the average surprise being 13.8%. Estimates for Phibro Animal Health’s fiscal 2026 EPS have climbed 5 cents to $2.35 in the past 30 days. Shares of the company have surged 76.5% in the past year compared with the industry’s 3.4% growth. PAHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 27.9%.Estimates for Envista’s 2025 earnings per share have increased 7.6% in the past 30 days. Shares of the company have rallied 16.7% in the past year compared with the industry’s 5.2% growth. Its earnings yield of 5.4% has also outpaced the industry’s -0.9%. NVST’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 16.5%.Free Report: Profiting from the 2nd Wave of AI ExplosionThe next phase of the AI explosion is poised to create significant wealth for investors, especially those who get in early. It will add literally trillion of dollars to the economy and revolutionize nearly every part of our lives.Investors who bought shares like Nvidia at the right time have had a shot at huge gains.But the rocket ride in the "first wave" of AI stocks may soon come to an end. The sharp upward trajectory of these stocks will begin to level off, leaving exponential growth to a new wave of cutting-edge companies.Zacks' AI Boom 2.0: The Second Wave report reveals 4 under-the-radar companies that may soon be shining stars of AI’s next leap forward.Access AI Boom 2.0 now, absolutely free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Masimo Corporation (MASI): Free Stock Analysis Report Phibro Animal Health Corporation (PAHC): Free Stock Analysis Report National Vision Holdings, Inc. (EYE): Free Stock Analysis Report Envista Holdings Corporation (NVST): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks