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Kits Eyecare (TSE:KITS)
TSX:KITS
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Kits Eyecare
(TSX:KITS)
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Rating:55Neutral
Price Target:
C$15.50
▲(5.95% Upside)
Kits Eyecare's overall stock score reflects a mix of strong financial performance and concerning technical and valuation indicators. The company's robust revenue growth and improved profitability metrics are positive, but the bearish technical indicators and high P/E ratio suggest caution. The lack of dividend yield further impacts the stock's attractiveness.
Positive Factors
Revenue Growth
Consistent revenue growth indicates robust sales expansion and market demand, supporting long-term business momentum and competitive positioning.
Balance Sheet Health
A low debt-to-equity ratio enhances financial stability, reducing financial risk and providing flexibility for future investments and growth opportunities.
Profitability Improvement
Improved gross profit margin indicates effective cost control and pricing strategies, which can enhance long-term profitability and shareholder value.
Negative Factors
Cash Flow Weakness
Declining free cash flow can limit the company's ability to reinvest in growth opportunities and may strain financial resources, impacting long-term sustainability.
Modest Net Profit Margin
A modest net profit margin suggests limited profitability, which may hinder the company's ability to generate sufficient returns and invest in future growth.
Operational Efficiency
Low EBIT and EBITDA margins indicate potential inefficiencies in operations, which could affect the company's ability to scale and improve profitability over time.
Kits Eyecare (KITS) vs. iShares MSCI Canada ETF (EWC)
Market Cap
C$480.44M
Dividend YieldN/A
Average Volume (3M)53.64K
Price to Earnings (P/E)125.2
Beta (1Y)1.02
Revenue Growth35.02%
EPS Growth1471.05%
CountryCA
Employees162
SectorConsumer Cyclical
Sector Strength84
IndustrySpecialty Retail
Share Statistics
EPS (TTM)-0.02
Shares Outstanding32,136,215
10 Day Avg. Volume77,427
30 Day Avg. Volume53,639
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
C$22.33Price Target Upside52.63% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
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:Aug 05, 2025
(Q1-2025)
| % Change Since: |
Next Earnings Date:Nov 06, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue and profit growth, driven by significant customer acquisition and retention. While marketing expenses slightly increased and inventory levels were higher than usual, the overall performance demonstrated robust growth and profitability, with positive future projections.Q1-2025 Updates
Positive Updates
Record Revenue Growth
Kits Eyecare reported record revenue of $46.6 million, up 34% year-over-year, surpassing their guidance range of $46 million to $48 million.
Significant Gross Profit and Margin Expansion
Gross profit grew over 53% year-over-year to $17.1 million, with gross margin expanding 460 basis points to 36.7%.
Strong Customer Growth
Kits welcomed over 95,000 new customers, a 28% increase year-over-year, with 62% of total revenue coming from returning customers.
Positive Adjusted EBITDA
The company achieved its 10th consecutive quarter of positive adjusted EBITDA, reaching $3.5 million or 7.4% of revenue, exceeding their guidance.
Expansion in Key Segments
All segments grew significantly, with glasses revenues growing 46% and contact lens revenues growing 32%.
Successful Autoship and Loyalty Programs
The Autoship program contributed nearly $6 million in revenue, up 11% year-over-year, and the KITS+ loyalty program showed strong early traction.
Negative Updates
Increased Marketing Expense
Marketing expenses increased slightly to 13.5% of revenue compared to 13% in the prior year, reflecting continued investment in customer acquisition.
Lower Average Order Value for New Customers
New customer acquisitions typically have a lower average order value, which can impact initial gross margin percentages.
Inventory Levels Higher Than Usual
Inventory levels were higher than expected due to caution regarding macroeconomic and supply chain volatility, though this is expected to normalize in future quarters.
Company Guidance
During the Kits Eyecare First Quarter 2025 Financial Results Conference Call, the company reported robust metrics underscoring its strong start to the year. Kits achieved record revenue of $46.6 million, representing a 34% increase year-over-year, with all key business segments growing over 30%. Specifically, glasses revenues surged by 46%, and contact lens revenues by 32%. The company also recorded its 10th consecutive quarter of positive adjusted EBITDA, reaching $3.5 million or 7.4% of revenue, surpassing their guidance. Gross profit grew by 53% year-over-year to $17.1 million, with a gross margin expansion of 460 basis points to 36.7%. Kits welcomed over 95,000 new customers, marking a 28% increase, while returning customers contributed 62% of total revenue. The Kits Autoship program generated nearly $6 million in revenue, highlighting its role as a critical revenue engine. Looking towards Q2, Kits projects revenue between $48 million to $50 million and an adjusted EBITDA margin of 3% to 5%, as they plan to invest in acquiring new customers and sustaining growth.Kits Eyecare Financial Statement Overview
Summary
Kits Eyecare demonstrates strong financial health with impressive revenue growth and profitability improvements. The balance sheet shows low leverage and a solid equity position, while cash flow metrics confirm efficient cash management. However, there is room for improvement in operational efficiency and asset growth.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.75
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.70
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.65
Positive
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 182.88M | 159.34M | 120.51M | 91.64M | 82.40M | 75.22M |
| Gross Profit | 65.18M | 53.65M | 40.79M | 29.25M | 20.89M | 21.39M |
| EBITDA | 9.37M | 8.31M | 1.86M | -721.00K | -14.68M | -1.80M |
| Net Income | 3.77M | 3.12M | -2.21M | -4.55M | -14.62M | -6.58M |
Balance Sheet | ||||||
| Total Assets | 94.26M | 103.02M | 87.64M | 93.86M | 90.94M | 54.66M |
| Cash, Cash Equivalents and Short-Term Investments | 18.11M | 19.27M | 16.04M | 18.79M | 20.50M | 2.31M |
| Total Debt | 7.72M | 12.60M | 15.39M | 19.44M | 22.94M | 22.33M |
| Total Liabilities | 35.09M | 45.13M | 36.20M | 40.16M | 36.16M | 55.23M |
| Stockholders Equity | 59.17M | 57.89M | 51.45M | 53.71M | 54.78M | -573.00K |
Cash Flow | ||||||
| Free Cash Flow | 5.48M | 9.88M | 1.84M | 4.42M | -23.09M | 3.96M |
| Operating Cash Flow | 8.10M | 13.04M | 2.40M | 4.68M | -19.46M | 4.18M |
| Investing Cash Flow | -2.61M | -3.15M | -563.00K | -258.00K | -3.63M | -225.00K |
| Financing Cash Flow | -6.62M | -5.02M | -5.07M | -5.13M | 41.48M | -4.84M |
Kits Eyecare Technical Analysis
Negative
14.63
Price Trends
16.19
Negative
15.75
Negative
13.03
Positive
Market Momentum
-0.41
Positive
36.07
Neutral
5.55
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:KITS, the sentiment is Negative. The current price of 14.63 is below the 20-day moving average (MA) of 16.12, below the 50-day MA of 16.19, and above the 200-day MA of 13.03, indicating a neutral trend. The MACD of -0.41 indicates Positive momentum. The RSI at 36.07 is Neutral, neither overbought nor oversold. The STOCH value of 5.55 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSE:KITS.
Kits Eyecare Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | C$1.96B | 12.19 | 14.38% | 2.90% | 0.57% | 8.54% | |
63 Neutral | C$417.84M | 15.25 | 5.36% | 2.82% | 7.61% | 1.71% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
55 Neutral | C$480.44M | 125.21 | 6.70% | ― | 35.02% | 1471.05% | |
51 Neutral | $38.90M | ― | ― | ― | -57.13% | 85.06% | |
48 Neutral | C$14.20M | ― | ― | ― | 8.53% | 98.44% |
* Consumer Cyclical Sector Average
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Kits Eyecare Corporate Events
Business Operations and StrategyFinancial Disclosures
Kits Eyecare Achieves Record Revenue and Sustained Growth in Q2 2025
Positive
Aug 5, 2025
Kits Eyecare Ltd. reported a record revenue of $49.6 million for the second quarter of 2025, marking a 31% year-over-year increase. The company also achieved its eleventh consecutive quarter of positive adjusted EBITDA, which improved to $2.6 million. This growth was driven by strong new customer acquisition and a significant increase in glasses revenue. Despite a net loss due to non-operating exchange losses, the company showed a robust operational performance with a 45.1% increase in gross profit, reflecting successful pricing and promotional strategies. Kits Eyecare is well-positioned for continued growth, with expectations of further revenue increases in the third quarter.
The most recent analyst rating on (TSE:KITS) stock is a Buy with a C$14.00 price target. To see the full list of analyst forecasts on Kits Eyecare stock, see the TSE:KITS Stock Forecast page.
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.