WRBY - Warby Parker: High SBC And Valuation Make Stock Unattractive

2024-06-11 11:40:40 ET

Summary

• Warby Parker offers good-quality glasses at an affordable price, leading to a strong sales retention rate.
• The company has expanded its retail concept aggressively, growing revenues at a 16.1% CAGR with room for multiplying the retail location count.
• The company's excessive SBC pushes earnings negative and causes dilution, and despite good operating leverage, the margin profile looks to be poor for quite a while.
• The valuation seems to price in excessive cash flow growth estimates.

Warby Parker Inc. ( WRBY ) sells eyeglasses, sunglasses, contacts, and related products. The company tries to compete in the industry by offering good-quality glasses at a relatively affordable price, with prescription glasses starting at $95 according to the company's IR page. Warby Parker's offering seems to resonate with customers with great estimates of sales retention rates....

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