National Vision Holdings, Inc. (EYE) stock intrinsic value fair value estimate & owner earnings analysis

National Vision runs 1,250 value-priced optical retail locations across the United States (1,240 a year earlier). The main brand is America's Best, with 1,057 stores and about 88% of 2025 revenue of $1,987.5 million. The rest is Eyeglass World (122 stores), Military (53 stores) and Fred Meyer host locations (18 stores). Customers buy eyeglasses, contact lenses and eye exams, and about 19% of revenue is exams and vision plans. What changed in the business: in 2024 the company ended its Walmart agreements and wound down its AC Lens operation. Those results are now reported separately as discontinued operations. Fiscal 2025 (a 53-week year) is the first year with no discontinued operations. How we measure earnings: we start from cash generated by operations, remove swings in working capital, subtract stock compensation as a real cost ($23.7 million in 2025), and subtract only the capital spending needed to maintain the stores. On this basis owner earnings per diluted share were about $0.16 to $0.17 in 2016 and 2017, $0.12 in 2018, $0.92 in 2019, $1.09 in 2020, $1.76 in 2021, $0.40 in 2022, $0.13 in 2023, $0.09 in 2024 and $0.42 in 2025. The 2020 and 2021 figures come from the pandemic years and are not used. Earnings from 2023 and 2024 are weaker: those years carried the Walmart wind-down, high new-store spending ($51.9 million in 2023 and $44.3 million in 2024, versus $16.8 million in 2025), and comparable sales growth of only 1.9% in 2024. One judgement call matters. In 2025 the cash flow statement shows a $45.7 million outflow in "other assets", up from $7.3 million, which the company says was mainly cloud-based software implementation. We treated this as a real cost of running the business rather than as working capital, because it is a cash outlay for technology the company keeps using. If that spending falls back toward the roughly $9 million a year now being amortized, owner earnings would be higher. We did not assume that. Starting point for the base case: 2025 owner earnings of $0.42 per share, reduced to $0.38 because the extra 53rd week added about $0.03 per share of profit. Growth check: owner earnings rose from $0.09 to $0.42 per share in 2025 (a rebound, not a run rate), and the base case assumes only 1% growth in the first year. The 2025 level is supported by the first half of 2026, when revenue rose 4.6% to $1,042.7 million and net income was $43.6 million versus $22.9 million a year earlier. Cash from operations in that half was lower ($69.8 million versus $86.5 million), because an inventory build ($36.2 million) and a decline in other liabilities ($20.4 million) used cash, and we count that as timing rather than a change in earning power. Base case, $5.63 per share: owner earnings of $0.38 per share growing 1% a year for ten years, then held level for another twenty years. The 1% reflects net store growth of 0.8% in 2025 (33 openings, 23 closures) and a record of opening 80 stores in 2022, 70 in 2023 and 69 in 2024. The company plans 30 to 35 openings in 2026. We did not credit the 6% comparable sales growth of 2025, which came from higher ticket and pricing (customer traffic fell slightly), or any further margin gains, because neither is contracted or repeatable at that pace. The level is held flat afterward because a chain of about 1,250 stores with maintenance spending already deducted keeps earning as long as it keeps its stores; we stop the story at thirty years because nothing we can name supports value beyond that. Bear case, $1.24 per share: owner earnings fall back to the 2024 level of $0.09 per share and stay there for thirty years with no growth. The evidence for this is that 2023 and 2024 came in at $0.13 and $0.09 just before 2025, that the 2025 gains came from higher ticket while customer traffic dipped slightly, and that the company already recorded $40.1 million of asset impairments in 2024 and closed 23 stores in 2025. The company also owes $237.6 million on a term loan due June 13, 2028 that will need to be repaid or refinanced; interest paid was $19.1 million in 2025. The $300 million revolving credit line was undrawn. Bull case, $10.31 per share: owner earnings of $0.60 per share, growing 3% a year for ten years, then level for twenty years. This assumes the 2025 pricing and product-mix gains hold (costs applicable to revenue fell to 41.2% of revenue from 41.9%), that the profit rate seen in the first half of 2026 continues, that software spending settles nearer its amortization level, and that store openings continue at the 30 to 35 a year the company plans for 2026. What we did not credit: share gains, new products, higher prices beyond what has already happened, a rebound in traffic, and any store growth beyond the pace already demonstrated. We did not deduct debt from value, since the owner earnings measure is already after interest; leverage is reflected in the bear case. What would make this estimate wrong: a sustained fall in customer traffic offsetting higher prices, loss of managed vision care contracts, which the company says its comparable sales growth can depend on, a return to the 2023 to 2024 cost levels, or costs of the technology build-out staying at 2025 levels. The 2016 to 2022 figures are as originally reported and include the former Walmart business; the 2023 to 2025 figures come from the latest filing, and cash flows for the discontinued operations were not separated in the cash flow statement, so they cannot be fully isolated. Shares appear to be worth about $5.63 in the base case, with a range of $1.24 to $10.31. The margin-of-safety price is well below the base value, at about $3.30, given how much owner earnings have varied year to year.