Assessing National Vision Holdings (EYE) Valuation After Recent Share Price Volatility

Event context and recent share moves

National Vision Holdings (EYE) has been trading without a specific headline catalyst, so recent price action offers the clearest signal for investors watching the optical retail name.

The stock closed at $27.06, with a 1 day return of 2.52% decline, 7 day return of 4.01% decline and roughly flat performance over the past month. Over the past 3 months, the share price shows a 10.04% gain. The 1 year total return is 118.40%, alongside a 3 year total return of 31.51% decline and 5 year total return of 44.93% decline.

See our latest analysis for National Vision Holdings.

For National Vision Holdings, the recent 4.01% 7 day share price decline and 3.39% 30 day share price decline sit against a 10.04% 90 day share price gain and a very strong 1 year total shareholder return of 118.40%. This suggests that short term momentum looks weaker than the longer term recovery trend.

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With the shares trading at $27.06 and indicators like a value score of 4 and a 34% intrinsic discount estimate, the key question is simple: is there still a buying opportunity here, or has the market already priced in future growth?

Most Popular Narrative: 20% Overvalued

With National Vision Holdings last closing at $27.06 against a widely followed fair value estimate of $27.00, the current price is sitting slightly above what that narrative suggests, and the whole debate comes down to how long the market is willing to pay up for its projected growth and margins.

The assumed bearish price target for National Vision Holdings is $22.0, which represents the lowest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of National Vision Holdings's future earnings growth, profit margins and other risk factors from analysts on the more bearish end of the spectrum.

Read the complete narrative.

Want to see what keeps this fair value pinned at $27.00 while bearish targets sit lower? Revenue pacing, margin rebuild and a future earnings multiple all pull in different directions. The tension between those inputs is what makes this narrative worth a closer read.

Result: Fair Value of $27.00 (OVERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, if secular demand for vision care stays firm and store or digital investments lift margins faster than expected, this bearish narrative could be tested.

Find out about the key risks to this National Vision Holdings narrative.

Another View: Cash Flows Paint A Different Picture

While the bearish narrative frames National Vision Holdings as roughly 20% overvalued around $27.06 versus a $22.00 target, our DCF model points the other way. On this view, the shares sit about 34.3% below an estimated future cash flow value of $41.18. Which story do you think fits your expectations better: cautious earnings multiples or a more generous cash flow path?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out National Vision Holdings for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 53 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

Reading this, you have both bullish and cautious angles in front of you. Act while the data is fresh and decide which side you lean toward by checking the 3 key rewards.

Looking for more investment ideas?

If this analysis has sharpened your thinking on National Vision Holdings, do not stop here. Broaden your opportunity set while the market is still offering choices.

• Target potential mispricings by scanning our list of 53 high quality undervalued stocks, where solid fundamentals meet prices that may not fully reflect them yet.
• Strengthen your focus on resilience by checking companies in the solid balance sheet and fundamentals stocks screener (43 results), built around balance sheets that look well supported.
• Hunt for tomorrow's standouts before they are widely followed by reviewing the screener containing 24 high quality undiscovered gems that emerge from our filters.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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