- If you are wondering whether National Vision Holdings is still offering value at its current share price, you are not alone.
- The stock last closed at US$27.90, with returns of 3.4% over the past week, 1.8% over the past month, 7.5% year to date, 129.4% over one year, 39.0% over three years, and a 41.6% decline over five years.
- Recent headlines have focused on National Vision Holdings as investors reassess its long term prospects. This helps explain why the share price has been so active over the past year and provides important context for anyone weighing up whether the current valuation still looks reasonable.
- Right now the company scores a 2 out of 6 valuation score. We will look at what traditional models say about its worth, then finish by pointing you to a more complete way of thinking about valuation that goes beyond a single number.
National Vision Holdings scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: National Vision Holdings Discounted Cash Flow (DCF) Analysis
A Discounted Cash Flow, or DCF, model estimates what a company might be worth by taking projected future cash flows and discounting them back to a single value today.
For National Vision Holdings, the model used is a 2 Stage Free Cash Flow to Equity approach. The company’s latest twelve month free cash flow is about $45.4 million. Analyst inputs and subsequent extrapolations suggest free cash flow of $117.6 million in 2026 and $178.7 million by 2035, with Simply Wall St extending estimates beyond the period covered by analysts.
By discounting these projected cash flows back to today, the model arrives at an estimated intrinsic value of about $29.69 per share. Compared with the recent share price of US$27.90, the DCF points to the stock trading at roughly a 6.0% discount, which is within a relatively tight range.
Put simply, the DCF suggests National Vision Holdings looks close to fairly priced, with a small margin in your favor rather than a glaring mispricing.
Result: ABOUT RIGHT
National Vision Holdings is fairly valued according to our Discounted Cash Flow (DCF), but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act.
Approach 2: National Vision Holdings Price vs Earnings (P/E)
For profitable companies, the P/E ratio is a useful yardstick because it links what you pay per share directly to the earnings that each share produces. It gives you a quick sense of how many dollars of price the market is attaching to each dollar of earnings.
What counts as a normal or fair P/E often reflects two things: how fast earnings are expected to grow, and how risky those earnings are perceived to be. Higher expected growth or lower perceived risk can justify a higher P/E, while slower growth or higher risk can point to a lower one.
National Vision Holdings currently trades on a P/E of 74.87x. That sits well above the Specialty Retail industry average P/E of 18.74x and the peer average of 17.76x. Simply Wall St’s Fair Ratio, its proprietary estimate of an appropriate P/E given factors like earnings growth, industry, profit margin, market cap and risks, is 29.39x. Because it blends these company specific drivers rather than relying only on broad peer or industry comparisons, the Fair Ratio can offer a more tailored reference point.
Comparing the Fair Ratio of 29.39x with the current P/E of 74.87x suggests the shares are trading at a richer level than this framework would imply.
Result: OVERVALUED
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Upgrade Your Decision Making: Choose your National Vision Holdings Narrative
Earlier we mentioned that there is an even better way to understand valuation. On Simply Wall St’s Community page you can use Narratives, where you set out your story for National Vision Holdings, link it to a concrete forecast for revenue, earnings and margins, and see the fair value that results from that view. You can lean closer to the bearish camp with a fair value around US$22, or the bullish camp closer to US$36. You can then compare that fair value with the current price and watch your Narrative update automatically as new news or earnings are added, helping you decide if and when the trade off between price and value looks attractive to you.
For National Vision Holdings, below are previews of two leading National Vision Holdings Narratives that may help frame different perspectives:
🐂 National Vision Holdings Bull Case
Fair value: US$39.00 per share
Gap to fair value: about 28.5% below this narrative fair value
Implied revenue growth used in the model: 6.8% a year
- Assumes long term margin expansion as modernization, digital personalization and brand refresh efforts support higher average ticket sizes and store productivity.
- Builds in rising demand for vision care alongside tele optometry and remote exams, with National Vision positioned as a high volume, low cost provider.
- Uses a higher fair value that reflects analyst expectations for stronger revenue growth, wider profit margins and a lower future P/E multiple than before.
🐻 National Vision Holdings Bear Case
Fair value: US$27.00 per share
Gap to fair value: about 3.3% above this narrative fair value
Implied revenue growth used in the model: 6.9% a year
- Focuses on risks from the shift to online eyewear, intense competition and reliance on key partnerships, which could pressure store traffic, pricing and margins.
- Uses assumptions that keep earnings growth more limited, with only modest margin improvement from today and a P/E that stays relatively high to support the fair value.
- Treats the reaffirmed guidance and current outlook as broadly consistent with a fair value close to the current price, rather than pointing to a large gap either way.
These two Narratives outline the current debate around National Vision Holdings. You can consider which assumptions are closer to your own view, or adapt them to create a version that better fits your expectations for the business.
Do you think there's more to the story for National Vision Holdings? Head over to our Community to see what others are saying!
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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