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HSIC

Henry Schein NasdaqGS:HSIC Stock Report

Last Price

US$66.93

Market Cap

US$9.1b

7D

-3.1%

1Y

-14.5%

Updated

28 Sep, 2022

Data

Company Financials +
HSIC fundamental analysis
Snowflake Score
Valuation6/6
Future Growth1/6
Past Performance4/6
Financial Health6/6
Dividends0/6

HSIC Stock Overview

Henry Schein, Inc. provides health care products and services to dental practitioners and laboratories, physician practices, government, institutional health care clinics, and other alternate care clinics worldwide.

Henry Schein, Inc. Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Henry Schein
Historical stock prices
Current Share PriceUS$66.93
52 Week HighUS$92.68
52 Week LowUS$65.80
Beta0.73
1 Month Change-9.69%
3 Month Change-12.78%
1 Year Change-14.50%
3 Year Change8.34%
5 Year Change-18.12%
Change since IPO1,076.79%

Recent News & Updates

Aug 25

Buy Henry Schein To Receive 'Resiliency Premium' In Equity Portfolios

Summary Henry Schein, Inc. offers a resiliency factor to equity portfolios amid the current macro climate. Those seeking to scale up weighting to defensives and reduce portfolio variance might consider the long-term cash compounder. We note that ROIC and FCF yield are back at or above FY15-17 levels, albeit on an 18% lower market cap. We price HSIC at $87.30 and revise our recommendation up from hold to buy. As such, HSIC offers a 'resiliency premium' that we believe will be rewarded by the market over the coming 6-12 months. Investment Summary Resiliency is a key factor to equity portfolios in the forward-looking climate. Maintaining a constant weight to quality and resiliency are paramount to reduce portfolio variance and reduce equity beta. We are seeking exposure to names that exemplify quality and cash generation to capture this theme. Here we look to Henry Schein, Inc. (HSIC) and note it displays a close fit to the kind of equity premia we are seeking exposure to here. Here we note double-digit return on invested capital and an FCF yield of 6% with HSIC trading at a market cap well behind FY15-FY17 levels. We re-rate HSIC to buy and value it at $87.30. Exhibit 1. HSIC 6-month price action Data: Updata Q2 earnings illustrate the case in point. Second quarter earnings were robust and demonstrate the factor of resiliency in the investment debate. Revenue of $3 billion came in ~210bps higher YoY whereas ex-PPE and Covid-19 turnover, local growth was closer to 6% for the year. Segmentally, global dental sales came in at $1.9 billion and narrowed by 310bps YoY. Meantime, global medical sales gained ~10% YoY to $1 billion. Consumable merchandise sales also narrowed by 220bps over the year, whereas North American dental sales also narrowed 110bps YoY in constant currency terms. Meanwhile, technology and value-added services printed $181 million in turnover and grew 18% YoY, underlined by strength in the Dentrix segment. However, dental equipment sales in North America gained 810bps from Q2 FY21. Underlining the growth is a 550bps gain in equipment sales. Covid-19 and related personal protective equipment ("PPE") sales have also diminished in line with industry expectations. HSIC sold ~$68 million in Covid-19 test kits last quarter, down from $75 million last year. The sales mix was between multi-assay and Covid-combination kits. Pricing volatility continues in this segment, and management anticipates further downside in Covid-19 and related PPE sales. Despite this, order backlog for equipment in both the North American and international businesses remains strong. In particular, HSIC recognized $242 million of demand pull-through in sales of dental specialty products, up 660bps YoY. Moving down the P&L, quarterly operating margin came in at 7.3% to $220 million ($1.60/share), up from $205 million ($1.46/share) YoY. It brought this down to a net income of $160 million for the year, or $1.16 per share. As part of its capital management strategy, the company also repurchased 1.3 million shares at an average of $81.42, spending $110 million. Free cash flow ("FCF") narrowed to $133 million, which was constructive seeing total debt decrease by $8 million sequentially. As seen in Exhibit 2, operating results have been seasonal for the company on a sequential basis since FY15. FCF yield has been equally as seasonal, yet continues to climb on a long-term basis. We note that HSIC is printing operating results in line with its FY15-FY17 levels; however, it is trading at a market capitalization and enterprise value that is 18% and 12% lower than December FY15 and FY17, respectively. Investors also realize an FCF yield at least 200bps higher over the same time at 6%. This exemplifies the kind of resiliency on offer. Plus, the pricing asymmetry looks yet to be realized on the chart, by estimate. Exhibit 2. Operating results back in line with FY15-17 levels, albeit on lower corporate valuation Data: HB Insights, HSIC SEC Filings and Prospectus Further evidence of this asymmetry is seen in the charts below. In Exhibit 3, note that return on invested capital has returned to FY15-17 highs of over 12%. Collectively, HSIC has printed a c.20% return on investment [defined as quarterly ROA plus ROIC]. Hence, we are now receiving ~12% ROIC for an EV that is 12% lower than FY15. This sits well above the company's WACC of 7%. Exhibit 3. ROIC and ROA have returned to previous ranges We are receiving this at market cap / enterprise value 18%-12% below the previous periods. Data: HB Insights, HSIC SEC Filings and Prospectus Meanwhile, in Exhibit 4, observe the quarterly marginal analysis for HSIC over the past 7 years to date. As noted, FCF has been seasonal, however operating margin has remained steady over this time period. We note this further evidences the kind of resiliency in earnings and margin retention that we are seeking exposure too. Exhibit 4. Data: HB Insights, HSIC SEC Filings Equity Value Balanced to Tangible Value Unlike many other names within the healthcare space, HSIC's balance sheet is skewed towards tangible value. Intangibles and goodwill continue to make up ~40% of total assets, as seen in the chart below. This trend has held constant since FY15, providing a solid case for valuation. Again, this is further evidence of the resiliency factor available to harvest for HSIC. Exhibit 5. When factoring in measures of corporate value, tangible book value is paramount in identifying payback period, valuation and future cash flows. This is the kind of equity asset structure that we are seeking exposure too - one that is tilted towards tangible measures of value. Data: HB Insights, HSIC SEC Filings In addition, cash earnings are high for HSIC, with the percentage of accruals in the earnings profile narrowing to c.0% as of Q2 FY22. As seen below, accruals historically make up a small portion of earnings, and trends have been improving in this regard since Q2 FY21. Despite this, the percentage of current assets made up by accruals has increased to ~8% last quarter, in range with the past 3 years (and before the pandemic). Exhibit 6. Percentage of accruals making up earnings remains low and has improved sequentially since FY19 Data: HB Insights, HSIC SEC Filings Valuation Shares are also trading at a deep discount to peers across key multiples used in this analysis. We note HSIC trading at 2.9x book value which is a 44% discount to GICS Industry peers, whereas it is also trading at a 51% discount to peers at 16.7x P/E. However, the market has priced HSIC to deliver a below-sector result next year at 18x forward P/E, below the sector median's 21.5x. Exhibit 7. Multiples and comps Data: HB Insights Referring back to Exhibit 6, we note that HSIC's earnings are largely cash-based and light on accruals. On this note, the stock's valuation is backed by cash/tangible value, and this gives us confidence in prescribing future value based on forward earnings targets.

Aug 18

Henry Schein announces $400M increase to stock buyback plan

Henry Schein (NASDAQ:HSIC) has announced a $400M increase to its share repurchase program. This authorization represents ~3.9% of shares outstanding at the current stock price. The program is in addition to the $400M buyback plan announced in May 2021, which was fully executed. As of August 17, 2022, the health care services provider had ~136M shares outstanding. Earlier this month, Henry Schein received an upgrade at UBS on potential margin expansion

Aug 09
If EPS Growth Is Important To You, Henry Schein (NASDAQ:HSIC) Presents An Opportunity

If EPS Growth Is Important To You, Henry Schein (NASDAQ:HSIC) Presents An Opportunity

For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to...

Shareholder Returns

HSICUS HealthcareUS Market
7D-3.1%-0.6%-2.0%
1Y-14.5%7.9%-20.3%

Return vs Industry: HSIC underperformed the US Healthcare industry which returned 6.3% over the past year.

Return vs Market: HSIC exceeded the US Market which returned -22.1% over the past year.

Price Volatility

Is HSIC's price volatile compared to industry and market?
HSIC volatility
HSIC Average Weekly Movement2.8%
Healthcare Industry Average Movement8.1%
Market Average Movement6.9%
10% most volatile stocks in US Market15.8%
10% least volatile stocks in US Market2.8%

Stable Share Price: HSIC is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: HSIC's weekly volatility (3%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
193222,000Stan Bergmanhttps://www.henryschein.com

Henry Schein, Inc. provides health care products and services to dental practitioners and laboratories, physician practices, government, institutional health care clinics, and other alternate care clinics worldwide. It operates through two segments, Health Care Distribution, and Technology and Value-Added Services. The Health Care Distribution segment offers dental products, including infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, dental implants, gypsum, acrylics, articulators, abrasives, dental chairs, delivery units and lights, X-ray supplies and equipment, personal protective equipment, and high-tech and digital restoration equipment, as well as equipment repair services.

Henry Schein, Inc. Fundamentals Summary

How do Henry Schein's earnings and revenue compare to its market cap?
HSIC fundamental statistics
Market CapUS$9.11b
Earnings (TTM)US$650.23m
Revenue (TTM)US$12.72b

14.0x

P/E Ratio

0.7x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
HSIC income statement (TTM)
RevenueUS$12.72b
Cost of RevenueUS$8.91b
Gross ProfitUS$3.81b
Other ExpensesUS$3.16b
EarningsUS$650.23m

Last Reported Earnings

Jun 25, 2022

Next Earnings Date

n/a

Earnings per share (EPS)4.78
Gross Margin29.94%
Net Profit Margin5.11%
Debt/Equity Ratio17.7%

How did HSIC perform over the long term?

See historical performance and comparison