Warby Parker (WRBY) AI Stock Analysis

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Warby Parker

(NYSE:WRBY)

67Neutral

Warby Parker shows strong financials with robust revenue growth and improved cash flow, but faces challenges with its profitability as reflected in its negative P/E ratio and bearish technical indicators. However, recent earnings call highlights strategic expansion and growth initiatives, potentially bolstering future performance. The overall score reflects a company with promising growth prospects, but current profitability and valuation concerns weigh down the stock's attractiveness.

Positive Factors

Partnerships

The newly announced partnership with Target potentially unlocks a significant opportunity to grow its active customer base, and ultimately top line, given Target's wide reach.

Revenue Growth

Warby Parker accelerated active customer growth, achieving its highest revenue growth quarter since 2021, while also expanding margins.

Valuation

Shares are currently valued at 21 times the revised 2026 adjusted EBITDA estimate, which is considered attractive given the expectation for greater than 30% earnings growth over at least the next two years.

Negative Factors

Customer Metrics

Active customers per store decreased by 8% compared to the previous quarter, and by 23% compared to two years ago.

Tariffs Impact

The 10% China tariff is expected to impact gross margin by 20-40 basis points, as China represents 20% of the cost of goods sold.

Valuation Concerns

There are concerns about a rich valuation at approximately 29 times the estimated F25 EV/EBITDA, making the risk/reward unfavorable.

Warby Parker (WRBY) vs. S&P 500 (SPY)

Market Cap

$1.88B

Dividend YieldN/A

Average Volume (3M)2.66M

Price to Earnings (P/E)―

Beta (1Y)1.35

Revenue Growth15.16%

EPS Growth68.55%

CountryUS

Employees2,218

SectorHealthcare

Sector Strength69

IndustryMedical - Instruments & Supplies

Share Statistics

EPS (TTM)-0.17

Shares Outstanding103,622,990

10 Day Avg. Volume2,400,046

30 Day Avg. Volume2,661,998

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)2.96

Price to Cash Flow (P/CF)28.70

P/FCF Ratio28.70

Enterprise Value/Market Cap1.55

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit6.82

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$24.79

Price Target Upside59.73% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering15

Warby Parker Business Overview & Revenue Model

Company DescriptionWarby Parker Inc. provides eyewear products. It offers eyeglasses, sunglasses, light-responsive lenses, blue-light-filtering lenses, and contact lenses, as well as accessories, including cases, lenses kit with anti-fog spray, pouches, and anti-fog lens spray. The company also offers eye exams and vision tests directly to consumers through its retail stores, website, and mobile apps. As of May 16, 2022, it had 160 retail stores in the United States and Canada. The company was formerly known as JAND, Inc. and changed its name to Warby Parker Inc. in June 2021. Warby Parker Inc. was incorporated in 2009 and is headquartered in New York, New York.

How the Company Makes MoneyWarby Parker generates revenue primarily through the direct sale of eyewear products, including prescription glasses, sunglasses, and contact lenses, both online and in physical retail locations. The company's vertically integrated model allows it to design, manufacture, and sell its products directly to consumers, which helps in maintaining competitive pricing. Warby Parker's revenue streams are bolstered by its 'Home Try-On' program, enhancing customer engagement and conversion rates. Additionally, the company leverages its retail stores to offer personalized services and eye exams, further driving sales. While Warby Parker does not rely on significant partnerships for revenue, its focus on customer experience and brand loyalty plays a crucial role in its earnings.

Warby Parker Key Performance Indicators (KPIs)

Any

Average Revenue Per Customer

Average Revenue Per Customer
Indicates how much revenue each customer generates on average, shedding light on customer value, pricing strategy effectiveness, and potential for revenue growth through customer retention and upselling.

Chart InsightsWarby Parker's average revenue per customer has consistently increased, reflecting strategic initiatives in insurance and eye care, which have driven higher customer spending. The earnings call highlights robust revenue growth and expansion plans, including new store openings and enhanced in-network insurance coverage. Despite lower margins in contact lenses, the company's focus on data-driven marketing and e-commerce growth supports continued revenue per customer increases. These efforts align with Warby Parker's expectation of sustained revenue growth and margin expansion in 2025, signaling strong business momentum and strategic execution.

Data provided by:

Main Street Data

Warby Parker Financial Statement Overview

Summary

Warby Parker is experiencing healthy revenue growth and improved cash flow, demonstrating strong operational performance. However, continued net losses and negative profit margins suggest challenges remain in achieving profitability. The balance sheet is solid, with a good equity position and manageable debt levels, supporting future growth potential. Overall, the financials indicate a company on a positive trajectory but still facing profitability hurdles.

Income Statement

Positive

Warby Parker has shown significant revenue growth with a 15.15% increase from 2023 to 2024, indicating strong market demand. The gross profit margin improved to 55.34% in 2024, reflecting efficient cost management. However, the company is still operating at a net loss, with a negative net profit margin of -2.64%, though this is an improvement from previous years. The EBIT and EBITDA margins remain negative, suggesting ongoing operational challenges.

Balance Sheet

Positive

The company's debt-to-equity ratio is 0.66, indicating a balanced leverage position. The equity ratio of 50.28% suggests a strong equity base relative to total assets. Return on equity improved but is still negative at -5.99%, highlighting the need for better profitability. Overall, the balance sheet shows financial stability with ample cash reserves.

Cash Flow

Very Positive

Warby Parker's cash flow is robust, with a significant increase in operating cash flow to $98.74 million in 2024. The free cash flow grew to $34.71 million, a notable improvement. The operating cash flow to net income ratio is strong at 4.84, indicating effective cash management. Free cash flow to net income is also positive, reflecting the company's ability to generate cash despite net losses.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
771.32M	669.76M	598.11M	540.80M	393.72M
	Gross Profit
426.83M	365.22M	341.06M	317.75M	231.94M
	EBIT
-30.11M	-72.00M	-111.20M	-143.66M	-55.63M
	EBITDA
-30.11M	-33.44M	-78.03M	-121.70M	-37.26M
	Net Income Common Stockholders
-20.39M	-63.20M	-110.39M	-144.27M	-55.92M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
254.16M	216.89M	208.59M	256.42M	314.08M
	Total Assets
676.49M	580.31M	568.71M	440.65M	444.75M
	Total Debt
225.35M	174.46M	173.38M	0.00	0.00
	Net Debt
-28.81M	-42.44M	-35.21M	-256.42M	-314.08M
	Total Liabilities
336.42M	278.52M	282.06M	154.65M	136.34M
	Stockholders Equity
340.07M	301.79M	286.65M	286.00M	308.41M
Cash Flow		Free Cash Flow
34.71M	7.32M	-49.81M	-80.51M	12.69M
	Operating Cash Flow
98.74M	60.99M	10.37M	-31.99M	32.76M
	Investing Cash Flow
-66.03M	-54.67M	-60.18M	-48.51M	-20.07M
	Financing Cash Flow
4.96M	2.87M	3.29M	23.00M	245.94M

Warby Parker Technical Analysis

Technical Analysis Sentiment

Negative

Last Price15.52

Price Trends

50DMA

19.51

Negative

100DMA

22.36

Negative

200DMA

19.43

Negative

Market Momentum

MACD

-1.32

Negative

RSI

42.19

Neutral

STOCH

70.73

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WRBY, the sentiment is Negative. The current price of 15.52 is below the 20-day moving average (MA) of 15.74, below the 50-day MA of 19.51, and below the 200-day MA of 19.43, indicating a bearish trend. The MACD of -1.32 indicates Negative momentum. The RSI at 42.19 is Neutral, neither overbought nor oversold. The STOCH value of 70.73 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WRBY.

Warby Parker Risk Analysis

Warby Parker disclosed 66 risk factors in its most recent earnings report. Warby Parker reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Warby Parker Peers Comparison

Overall Rating

UnderperformOutperform

Sector (51)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
WRBY	67 Neutral	$1.88B	―	-6.35%	―	15.16%	68.55%
BLCO	58 Neutral	$4.85B	―	-4.76%	―	15.56%	-21.60%
Sector *	51 Neutral	$5.31B	3.39	-40.42%	2.90%	18.11%	2.25%
LUCY	35 Underperform	$5.13M	―	-106.00%	―	41.99%	47.51%

* Healthcare Sector Average

Performance Comparison

WRBY

Warby Parker

15.52

3.05

24.46%

BLCO

Bausch + Lomb Corporation

13.73

-1.39

-9.19%

LUCY

Innovative Eyewear, Inc.

2.09

-2.73

-56.64%

Warby Parker Earnings Call Summary

Earnings Call Date:Feb 27, 2025

(Q4-2024)

% Change Since: -34.68%|

Next Earnings Date:May 08, 2025

Earnings Call Sentiment Positive

The earnings call highlighted Warby Parker's robust revenue growth, expansion plans, and strategic initiatives in insurance and eye care, indicating strong business momentum. While there are some challenges such as lower margins in the contact lens category and weather-impacted guidance, the positive achievements and growth strategies largely outweigh these concerns.

Q4-2024 Updates

Positive Updates

Record Revenue Growth

Warby Parker reported its highest revenue growth quarter since 2021, with a full-year revenue increase of over 15% and a fourth-quarter revenue rise of 17.8% year-over-year.

Expansion of Store Network

41 new stores were opened in 2024, with plans to open 45 more in 2025, including a partnership with Target to open five shop-in-shops.

Strong Growth in Insurance and Eye Exams

Insurance business expanded with in-network coverage to over 30 million lives. Eye exam revenue grew over 40% year-over-year, contributing to higher average revenue per customer.

Improved Adjusted EBITDA Margin

Adjusted EBITDA margin expanded by approximately 170 basis points, with a 40% increase in adjusted EBITDA versus 2023.

Positive Trends in E-commerce

E-commerce revenue grew for the first time since 2021, with a 5.3% increase in Q4 and a full-year increase of 3%.

Negative Updates

Continued Lower Gross Margin from Contact Lenses

Contact lenses, while contributing to gross profit dollars, have a lower gross margin percentage compared to other product categories.

Weather Impact on Q1 2025 Guidance

Recent weather conditions have impacted trends, reflected in a cautious Q1 2025 guidance with estimated revenue growth of 12% to 13%.

Company Guidance

In Warby Parker's Fourth Quarter 2024 Earnings Call, the company reported a strong performance with revenue growth of 15.2% for the full year and 17.8% in Q4, marking it as their highest revenue growth quarter since 2021. The company expanded its adjusted EBITDA margins by approximately 170 basis points and achieved a 40% increase in adjusted EBITDA compared to 2023. Warby Parker opened 41 new stores and maintained positive e-commerce growth for the first time since 2021. The company also focused on expanding its insurance business, growing contacts and exams by 36% and 41% respectively, and increasing in-network coverage to over 30 million lives. For 2025, Warby Parker plans to continue its growth trajectory by opening 45 new stores, scaling its insurance business, and leveraging a data-driven media mix model to optimize marketing spend, which is expected to remain in the low teens as a percent of revenue. The company anticipates achieving 14% to 16% revenue growth with an adjusted EBITDA margin of approximately 11% at the midpoint, aiming for an additional 150 basis points of margin expansion.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.