Strong Brand Presence and increased Network to Drive Business Growth:  New Look Vision Group Inc. (TSX: BCI) offers eye care products and services including eyewear, contact lenses, sunglasses and eye care accessories across Canada. As of 28, December 2019, the Company's had a total network 394 of stores.

The Group announced a quarterly dividend of CAD 0.15 per share to shareholders. For FY19, BCI paid an annual dividend of CAD 0.60 per share, remained unchanged from FY18.

The company acquired Edward Beiner Group, which resulted in an addition of 16 stores, 4 in Canada and 12 in the US.

Financial Highlights: For the period ended December 28, 2019, BCI posted revenue of CAD 297.87 million, reflecting a growth of 2.3% on y-o-y basis. The increase was aided by higher comparable store sales growth followed by newly acquired stores, while scheduled closures of stores remained a drag. Adjusted EBITDA rose 2.5% to CAD 55.85 million, resulting in an improved margin over FY18. The improvement was primarily due to a decline in operating expenses as a percentage of total revenues. The company reported solid bottom-line growth of 32.1% to CAD 18.75 million, on account of higher EBITDA, lower financial expenses and declining depreciation. The company successfully reduced total debt by CAD 9.8 million through voluntary and contractual repayments.

FY19 Income Statement Highlights (Source: Company Reports)

Stock Recommendation: The stock of BCI is quoting at CAD 24.50 with a market capitalization of CAD 385.58 million. The stock price corrected by 26.84% and 20.97% in the last one month and one year, respectively. The stock is trading at the lower band of its 52-weeks trading range of CAD 20.11 and 35.40. The company has a strong brand presence of New Look Eyewear, Greiche & Scaff, Vogue Optical, and Iris, which has tremendous appeal amongst the customers. In order to support the Management’s omnichannel strategy, BCI invested CAD 8.9 million in Bespoke Eyewear and the technical component during the year. Over the years, the company has successfully placed itself as a leading player within the Canadian retail optical space. Going forward, we believe, the company’s decent operating performance coupled with successful integration are the major tailwinds that would enhance the market position. The stock is trading at a premium valuation of 17.70x on a TTM basis, significantly higher than the industry (Specialty Retailers) median of 4.9x. We believe, owing to the brand presence, market share and network presence, the premium valuation is justified. However, the current economic situation driven by COVID -19 outbreak poses a challenge.  Considering the aforesaid facts and recent price correction, we would recommend a ‘Speculative Buy’ on the stock at the current market price of CAD 24.50, up 15.29% as on April 03, 2020.

BCI One-Year Daily Price Chart (Source: Thomson Reuters)

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