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Kits Eyecare (TSE:KITS)
TSX:KITS
Canadian Market

Kits Eyecare (KITS) AI Stock Analysis

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Kits Eyecare

(TSX:KITS)

Rating:77Outperform
Price Target:
C$16.50
▲(14.98%Upside)
Kits Eyecare's overall stock score of 77 reflects its strong financial performance and positive earnings outlook, driven by impressive revenue growth and strategic investments. The technical indicators support a short-term bullish trend, although the high P/E ratio suggests caution due to high valuation. Corporate events further bolster confidence in the company's future growth prospects.
Positive Factors
Earnings
Gross margin was 36.7% exceeding estimates, driven by strong organic growth of 34% for the third consecutive quarter.
Growth Opportunities
The company has the potential to double its capacity to ~$500M, indicating significant growth opportunities.
Product Development
Upcoming AI tools, termed 'Optician AI', are expected to enhance customer experience.
Negative Factors
Financial Performance
The Q2 EBITDA margin guidance is below street expectations due to planned marketing investments.
Guidance
Management guided Q1/25 revenue between $46-48M, a positive surprise, along with 4-6% Adj. EBITDA margin.
Valuation Concerns
KITS is valued at a lower multiple compared to e-commerce peers with similar growth rates, suggesting it remains notably undervalued.

Kits Eyecare (KITS) vs. iShares MSCI Canada ETF (EWC)

Kits Eyecare Business Overview & Revenue Model

Company DescriptionKITS Eyecare is a leading online eyewear retailer that focuses on providing a wide range of high-quality eyewear products, including prescription glasses, contact lenses, and sunglasses. The company operates primarily in the e-commerce sector, leveraging a direct-to-consumer model to deliver a seamless shopping experience. KITS Eyecare prides itself on offering competitive prices, fast delivery, and exceptional customer service.
How the Company Makes MoneyKITS Eyecare generates revenue primarily through the sale of eyewear products via its online platform. The company's key revenue streams include the sale of prescription glasses, which often involve an upsell of premium lens options and coatings, and contact lenses, which cater to a recurring customer base due to the need for regular replacements. Additionally, KITS Eyecare may benefit from partnerships with eyewear brands and suppliers, allowing it to offer a diverse range of products. The company's direct-to-consumer model helps reduce overhead costs and increase margins, contributing to its overall profitability.

Kits Eyecare Earnings Call Summary

Earnings Call Date:May 06, 2025
(Q1-2025)
|
% Change Since: 26.65%|
Next Earnings Date:Aug 07, 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 demonstrates a strong recovery with improving revenue, profitability, and cash flow metrics. While the balance sheet shows low leverage and solid equity, past financial instability highlights the need for ongoing stability. The company's trajectory appears positive, but continued monitoring of financial health is recommended.
Income Statement
85
Very Positive
Kits Eyecare has shown a solid recovery with significant revenue growth over the past few years. The gross profit margin improved to 33.7%, and the net profit margin turned positive to 2% in the latest period. EBIT and EBITDA margins also showed positive trends, reflecting operational efficiency gains. However, historical volatility in earnings should be noted.
Balance Sheet
70
Positive
The company maintains a healthy balance sheet with a debt-to-equity ratio of 0.22, indicating low leverage. The return on equity is positive at 5.38%, showcasing profitability. The equity ratio stands at 56.2%, reflecting a strong equity base. Although improving, prior challenges in equity and assets suggest caution.
Cash Flow
78
Positive
Operating cash flow significantly improved, and free cash flow growth is strong at 436%. The operating cash flow to net income ratio is robust, suggesting efficient cash generation. Free cash flow to net income ratio also shows adequate conversion. Historical cash flow volatility remains a consideration.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
159.34M120.51M91.64M82.40M75.22M
Gross Profit
53.65M40.79M29.25M20.89M21.39M
EBIT
5.43M-2.38M-4.35M-17.05M122.00K
EBITDA
8.31M1.86M-721.00K-14.68M-1.80M
Net Income Common Stockholders
3.12M-2.21M-4.55M-14.62M-6.58M
Balance SheetCash, Cash Equivalents and Short-Term Investments
19.27M16.04M18.79M20.50M2.31M
Total Assets
103.02M87.64M93.86M90.94M54.66M
Total Debt
12.60M15.39M19.44M22.94M22.33M
Net Debt
-6.67M-646.00K648.00K2.44M20.02M
Total Liabilities
45.13M36.20M40.16M36.16M55.23M
Stockholders Equity
57.89M51.45M53.71M54.78M-573.00K
Cash FlowFree Cash Flow
9.88M1.84M4.42M-23.09M3.96M
Operating Cash Flow
13.04M2.40M4.68M-19.46M4.18M
Investing Cash Flow
-3.15M-563.00K-258.00K-3.63M-225.00K
Financing Cash Flow
-5.02M-5.07M-5.13M41.48M-4.84M

Kits Eyecare Technical Analysis

Technical Analysis Sentiment
Positive
Last Price14.35
Price Trends
50DMA
12.10
Positive
100DMA
10.69
Positive
200DMA
10.08
Positive
Market Momentum
MACD
0.72
Negative
RSI
73.32
Negative
STOCH
85.27
Negative
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 14.35 is above the 20-day moving average (MA) of 13.29, above the 50-day MA of 12.10, and above the 200-day MA of 10.08, indicating a bullish trend. The MACD of 0.72 indicates Negative momentum. The RSI at 73.32 is Negative, neither overbought nor oversold. The STOCH value of 85.27 is Negative, 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 (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
77
Outperform
C$454.82M97.628.21%34.10%
TSLNF
73
Outperform
C$1.92B12.0614.49%2.78%0.47%9.41%
TSGBT
65
Neutral
C$416.94M14.165.95%2.79%5.97%174.18%
62
Neutral
$6.84B11.412.80%3.87%2.70%-24.58%
51
Neutral
C$7.11M204.61%-10.48%94.56%
48
Neutral
$6.46M
-36.77%83.80%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
TSE:KITS
Kits Eyecare
14.35
5.92
70.23%
TSE:NTAR
NexTech AR Solutions
0.04
-0.07
-65.00%
TSE:GBT
BMTC Group Inc.
13.03
0.73
5.93%
TSE:LNF
Leon's Furniture
28.09
6.52
30.23%
TSE:ECOM
Emerge Commerce Ltd
0.05
0.00
0.00%

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.