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Kits Eyecare (TSE:KITS)
TSX:KITS
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Kits Eyecare
(TSX:KITS)
Rating:73Outperform
Price Target:
C$18.00
▲(10.77%Upside)
Positive Factors
Customer Engagement
A robust number of repeat customers contributed 62% of revenue, supporting a strong EBITDA margin.
Growth Potential
The global eyewear market is projected to reach over $323 billion by 2030, indicating significant growth opportunities.
Market Position
KITS is positioned as a leading innovator poised to continue capturing significant value in the digitized landscape.
Revenue Growth
The company has the potential to double its capacity to ~$500M, indicating significant growth opportunities.
Negative Factors
Earnings Guidance
The Q2 EBITDA margin guidance is below street expectations due to planned marketing investments.
Valuation Concerns
Shares are trading at all-time high levels due to a re-rate driven by EBITDA margin acceleration, making the risk-reward profile attractive.
Kits Eyecare (KITS) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$520.11M
Dividend YieldN/A
Average Volume (3M)28.45K
Price to Earnings (P/E)110.5
Beta (1Y)0.77
Revenue Growth34.10%
EPS GrowthN/A
CountryCA
Employees162
SectorConsumer Cyclical
Sector Strength71
IndustrySpecialty Retail
Share Statistics
EPS (TTM)0.05
Shares Outstanding32,006,916
10 Day Avg. Volume21,323
30 Day Avg. Volume28,448
Financial Highlights & Ratios
PEG Ratio2.23
Price to Book (P/B)8.52
Price to Sales (P/S)0.00
P/FCF Ratio83.41
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$21.00Price Target Upside29.23% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
Kits Eyecare Business Overview & Revenue Model
Company DescriptionKits Eyecare Ltd. operates a digital eyecare platform for eyes in the United States and Canada. The company manufactures progressive and contact lenses, eyeglasses, and frames under the KITS brand, as well as distributes eyewear products of various brands. It operates through a network of optical e-commerce websites, including KITS.com, KITS.ca, OptiContacts.com, and ContactsExpress.ca. The company was incorporated in 2018 and is headquartered in Vancouver, Canada.
How the Company Makes MoneyKits Eyecare generates revenue primarily through the sale of its eyewear products, including prescription eyeglasses, sunglasses, and contact lenses, directly to consumers via its e-commerce platform. The company capitalizes on the growing demand for online shopping by providing a convenient, user-friendly experience that allows customers to easily select and purchase optical products. Additionally, KITS may engage in strategic partnerships with eyewear brands and suppliers to broaden its product range and optimize its supply chain, thus contributing to its earnings. The company's revenue model is further supported by its focus on customer loyalty and retention through regular promotions and subscription services for contact lenses.
Kits Eyecare Earnings Call Summary
Earnings Call Date:May 06, 2025
(Q1-2025)
| % Change Since: 43.42%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Positive
The earnings call highlighted impressive revenue growth, margin improvements, and strong customer acquisition and retention metrics. However, there is a planned increase in marketing expenses to drive further growth, which is expected to impact short-term EBITDA margins. Overall, the sentiment is positive due to the significant growth and strategic investments for future expansion.Q1-2025 Updates
Positive Updates
Record Revenue and Growth Across Segments
Kits Eyecare achieved record revenue of $46.6 million, up 34% year-over-year. All four key segments grew over 30%, with glasses revenues growing 46%, contact lens revenues growing 32%, Canada growing 35%, and the U.S.A. growing 33%.
Significant Margin Improvement
Gross profit grew over 53% year-over-year, reaching $17.1 million. The gross margin expanded by 460 basis points to 36.7%, up from 32.1% in Q1 last year.
Strong Customer Acquisition and Retention
Kits welcomed over 95,000 new customers, a 28% increase year-over-year, with 62% of total revenue coming from returning customers. The Kits Autoship program contributed almost $6 million in revenue, up 11% year-over-year.
Successful Expansion of Premium Products
Revenue from premium upgrades grew nearly 60% year-over-year, with margins remaining healthy. The premium lens category now accounts for approximately 40% of total glasses revenue.
Operational Efficiency Gains
Fulfillment expense as a percentage of revenue improved to 10.9% from 11.9% last year. Marketing expense was 13.5% of revenue, with general and administrative expenses decreasing from 6.9% to 6.3% of revenue.
Negative Updates
Moderate Increase in Marketing Spend Expected
The Q2 EBITDA margin is projected to decrease to between 3% and 5% due to increased investment in customer acquisition.
Lower Average Order Value for New Customers
New customers typically have a lower average order size, impacting the overall average order value despite increased customer acquisition.
Company Guidance
During Kits Eyecare's Q1 2025 earnings call, the company reported a record revenue of $46.6 million, marking a 34% year-over-year increase, and exceeded their adjusted EBITDA margin guidance by achieving 7.4%, or $3.5 million. Revenue growth was driven by all segments, with glasses sales up 46%, contact lenses up 32%, and geographical growth of 35% in Canada and 33% in the USA. Kits also welcomed over 95,000 new customers, a 28% increase from the previous year, while 62% of total revenue was generated from returning customers. The company expects Q2 revenue between $48 million and $50 million, with an adjusted EBITDA margin of 3% to 5%. Despite absorbing high new customer growth, gross profit grew by over 53% to $17.1 million, with a gross margin expansion of 460 basis points to 36.7%. Kits also highlighted the success of its KITS+ loyalty program and premium lens upgrades, which contributed significantly to their robust performance.Kits Eyecare Financial Statement Overview
Summary
Kits Eyecare exhibits strong financial health, driven by substantial revenue growth and improving profitability. The balance sheet is stable with low leverage, and cash flow is robust, indicating effective cash management. However, there's room for operational efficiency and asset growth enhancement.Income Statement
Kits Eyecare showed strong revenue growth over the past years, with a notable increase from $91.6M in 2022 to $171.2M TTM. The gross profit margin improved significantly, reaching 34.8% TTM, indicative of efficient cost management. Net profit margin improved to 2.7% TTM, demonstrating profitability turnaround. However, EBIT and EBITDA margins, though improving, remain modest, suggesting room for enhancing operational efficiency.85
Very Positive
Balance Sheet
The company's balance sheet is stable, with a debt-to-equity ratio of 0.16 TTM, indicating low leverage. The equity ratio stands at 60.2% TTM, reflecting a solid capital structure. Return on equity improved to 7.6% TTM, showing effective use of equity capital. However, the total assets have been relatively stable, suggesting limited asset growth.72
Positive
Cash Flow
Cash flow performance is robust, with a positive free cash flow of $6.3M TTM, indicating effective cash generation. Operating cash flow to net income ratio is 2.0 TTM, showing strong cash conversion. Free cash flow to net income ratio of 1.34 TTM further confirms efficient cash flow management. However, fluctuations in investing and financing cash flows suggest potential volatility in cash reserves.78
Positive
| Breakdown | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 159.34M | 120.51M | 91.64M | 82.40M | 75.22M |
| Gross Profit | 53.65M | 40.79M | 29.25M | 20.89M | 21.39M |
| EBITDA | 8.31M | 1.86M | -721.00K | -14.68M | -1.80M |
| Net Income | 3.12M | -2.21M | -4.55M | -14.62M | -6.58M |
Balance Sheet | |||||
| Total Assets | 103.02M | 87.64M | 93.86M | 90.94M | 54.66M |
| Cash, Cash Equivalents and Short-Term Investments | 19.27M | 16.04M | 18.79M | 20.50M | 2.31M |
| Total Debt | 12.60M | 15.39M | 19.44M | 22.94M | 22.33M |
| Total Liabilities | 45.13M | 36.20M | 40.16M | 36.16M | 55.23M |
| Stockholders Equity | 57.89M | 51.45M | 53.71M | 54.78M | -573.00K |
Cash Flow | |||||
| Free Cash Flow | 9.88M | 1.84M | 4.42M | -23.09M | 3.96M |
| Operating Cash Flow | 13.04M | 2.40M | 4.68M | -19.46M | 4.18M |
| Investing Cash Flow | -3.15M | -563.00K | -258.00K | -3.63M | -225.00K |
| Financing Cash Flow | -5.02M | -5.07M | -5.13M | 41.48M | -4.84M |
Kits Eyecare Technical Analysis
Positive
16.25
Price Trends
14.46
Positive
12.69
Positive
10.85
Positive
Market Momentum
0.54
Positive
66.72
Neutral
29.25
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:KITS, the sentiment is Positive. The current price of 16.25 is above the 20-day moving average (MA) of 15.82, above the 50-day MA of 14.46, and above the 200-day MA of 10.85, indicating a bullish trend. The MACD of 0.54 indicates Positive momentum. The RSI at 66.72 is Neutral, neither overbought nor oversold. The STOCH value of 29.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:KITS.
Kits Eyecare Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | C$520.11M | 110.54 | 8.21% | ― | 34.10% | ― | |
63 Neutral | $17.10B | 10.79 | -8.01% | 2.94% | 1.62% | -25.73% | |
| ― | C$3.73M | ― | ― | ― | ― | ||
74 Outperform | C$447.18M | 15.19 | 5.95% | 2.60% | 5.97% | 174.18% | |
73 Outperform | C$1.87B | 12.00 | 14.49% | 2.91% | 0.47% | 9.41% | |
| ― | $11.54M | ― | ― | ― | ― | ||
64 Neutral | C$13.20M | ― | 204.61% | ― | -10.48% | 94.56% |
* Consumer Cyclical Sector Average
Performance Comparison
TSE:KITS
Kits Eyecare
16.25
6.22
62.01%
TSE:FTI
FTI Foodtech International
0.16
0.12
300.00%
TSE:GBT
BMTC Group Inc.
13.84
0.93
7.20%
TSE:LNF
Leon's Furniture
27.46
3.34
13.85%
NEXCF
NexTech AR Solutions
0.06
-0.02
-25.00%
TSE:ECOM
Emerge Commerce Ltd
0.09
0.03
50.00%
Kits Eyecare Corporate Events
Executive/Board ChangesShareholder Meetings
Kits Eyecare Reports 2025 AGM Voting Results
Positive
Jun 4, 2025
Kits Eyecare Ltd. announced the results of its 2025 Annual General Meeting, where all proposed resolutions were passed, including the election of six directors and the re-appointment of MNP LLP as auditors. The voting results reflect strong shareholder support, positioning the company to continue its focus on innovation and customer satisfaction in the digital eyecare industry.
The most recent analyst rating on (TSE:KITS) stock is a Buy with a C$11.25 price target. To see the full list of analyst forecasts on Kits Eyecare stock, see the TSE:KITS Stock Forecast page.
Business Operations and StrategyFinancial Disclosures
Kits Eyecare Achieves Record First Quarter Results with 34% Revenue Growth
Positive
May 6, 2025
Kits Eyecare Ltd. reported a record-breaking first quarter in 2025, with a 34% increase in revenue year-over-year, reaching $46.6 million. The company’s adjusted EBITDA also improved significantly to $3.5 million, marking its tenth consecutive quarter of positive adjusted EBITDA. The growth was driven by increased sales of glasses, with 104,000 pairs delivered, and a focus on acquiring high-value customers. This financial performance underscores the strength of Kits’ vertically integrated model and its strategic focus on operational efficiency, positioning the company for sustained profitable growth.
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.