While National Vision Holdings, Inc. (NASDAQ:EYE) might not be the most widely known stock at the moment, it saw a decent share price growth in the teens level on the NASDAQGS over the last few months. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine National Vision Holdings’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for National Vision Holdings

What's the opportunity in National Vision Holdings?

According to my price multiple model, where I compare the company's price-to-earnings ratio to the industry average, the stock currently looks expensive. I’ve used the price-to-earnings ratio in this instance because there’s not enough visibility to forecast its cash flows. The stock’s ratio of 62.39x is currently well-above the industry average of 13.56x, meaning that it is trading at a more expensive price relative to its peers. But, is there another opportunity to buy low in the future? Since National Vision Holdings’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What kind of growth will National Vision Holdings generate?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by 43% over the next couple of years, the future seems bright for National Vision Holdings. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What this means for you:

Are you a shareholder? It seems like the market has well and truly priced in EYE’s positive outlook, with shares trading above industry price multiples. However, this brings up another question – is now the right time to sell? If you believe EYE should trade below its current price, selling high and buying it back up again when its price falls towards the industry PE ratio can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping tabs on EYE for some time, now may not be the best time to enter into the stock. The price has surpassed its industry peers, which means it is likely that there is no more upside from mispricing. However, the positive outlook is encouraging for EYE, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about National Vision Holdings as a business, it's important to be aware of any risks it's facing. While conducting our analysis, we found that National Vision Holdings has 1 warning sign and it would be unwise to ignore this.

If you are no longer interested in National Vision Holdings, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

This article by Simply Wall St is general in nature. 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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