A month has gone by since the last earnings report for Henry Schein (HSIC Quick QuoteHSIC - Free Report) . Shares have added about 2.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Henry Schein due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Henry Schein Q4 Earnings Top Estimates, Margins Grow

Henry Schein reported adjusted earnings per share of $1.07 from continuing operations in the fourth quarter of 2021, reflecting a 7% rise year over year. Moreover, adjusted earnings per share surpassed the Zacks Consensus Estimate by 18.9%. The quarter’s adjustments exclude the impact of certain restructuring charges, among others.

GAAP earnings per share in the fourth quarter was $1.05 versus the year-ago EPS of 99 cents, reflecting a rise of 6.1%.

For the full year, adjusted earnings from continuing operations were $4.52 per share, 52.2% up from the year-ago period. It also beat the Zacks Consensus Estimate by 3.9%.

Revenues in Detail

Henry Schein reported net sales of $3.33 billion in the fourth quarter, up 5.2% year over year. The metric beat the Zacks Consensus Estimate by 4.7%.

The year-over-year uptick included 1.4% internal growth in local currencies, 4.3% growth from acquisitions and 0.5% decline related to foreign currency exchange.

In the quarter under review, the company recorded sales of $2.48 billion in the North American market, up 7.1% year over year. Sales totaled $850.1 million in the international market, down 0.1% year over year.

Full-year revenues were $12.40 billion, reflecting a 22.6% increase from the year-ago period. Revenues also surpassed the Zacks Consensus Estimate by 1.2%.

Segment Analysis

Henry Schein derives revenues from three operating segments — Dental, Medical, and Technology and Value-added Services.

In the fourth quarter, the company recorded $2.02 billion of global Dental sales, up 9.4% year over year. In local currencies, the segment’s revenues include internally-generated sales growth of 6.4%, 3.9% growth from acquisitions and 0.9% decline related to foreign currency exchange. Further, the internal growth in local currencies of 6.4% included an increase of 9.3% in North America and a rise of 2.5% internationally.

Henry Schein’s uptick in overall dental sales performance reflects a continued recovery in patient traffic compared to the pre-pandemic levels.

North America’s dental consumable merchandise’s internal sales in local currencies rose 10.3%, whereas dental equipment internal sales in local currencies rose 6.6%. Internationally, dental consumable merchandise internal sales and dental equipment internal sales, both in local currencies, improved 1.9% and 4.2%, respectively.

Global Medical revenues fell 3.2% year over year to $1.10 billion. The segment’s revenues include a decrease of 7.1% in internal local currencies and 3.9% growth from acquisitions. There was no impact related to foreign currency exchange.

Revenues from global Technology and Value-added Services rose 27.8% to $177.2 million. This included a rise of 13.4% in internal local currency sales and 14.4% growth from acquisitions. There was no impact related to foreign currency exchange.

Margin Trend

In the reported quarter, gross profit totaled $979.5 million, reflecting a 13.9% uptick year over year. Gross margin expanded 225 basis points (bps) to 29.4%.

Selling, general and administrative expenses rose 14.9% to $774.4 million in the quarter under review.

Overall adjusted operating profit was $205.1 million, reflecting a rise of 10.5% year over year. Adjusted operating margin expanded 30 bps year over year to 6.2%.

Financial Position

The company exited 2021 with cash and cash equivalents of $117.9 million compared with $421.2 million at the end of 2020. Long-term debt for the company at the end of 2021 was $811.3 million compared with $515.8 million at the end of 2020.

Cumulative net cash provided by operating activities from continuing operations till the end of 2021 was $709.6 million compared with $593.5 million in the year-ago period.

During the fourth quarter of 2021, the company repurchased shares of its common stock for a total of approximately $150 million.

2022 Guidance

Henry Schein has updated the earnings per share guidance for 2022.

For 2022, Henry Schein expects adjusted earnings per share from continuing operations in the range of $4.75 to $4.91, suggesting 7-10% growth compared with 2020. This compares with preliminary adjusted earnings per share from continuing operations guidance (issued on Nov 2, 2021) for 2022, suggesting mid-to-high single-digit growth over 2021. The Zacks Consensus Estimate for the same is currently pegged at $4.66.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted 7.38% due to these changes.

VGM Scores

At this time, Henry Schein has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Henry Schein has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.