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Henry Schein (HSIC) Up 4.9% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Henry Schein (HSIC - Free Report) . Shares have added about 4.9% 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 drivers.
Henry Schein Q3 Revenues Miss, 2023 Guidance Cut
Henry Schein registered adjusted earnings per share of $1.32 in the third quarter of 2023, up 2.3% from the year-ago period’s adjusted EPS. However, the metric missed the Zacks Consensus Estimate by 0.8%.
Revenues in Detail
Henry Schein reported net sales of $3.16 billion in the third quarter, up 3.1% year over year. However, the metric lagged the Zacks Consensus Estimate by 0.9%.
The year-over-year increase included a 1.2% decrease in local currencies, 3.2% growth from acquisitions and a 1.1% increase in net sales related to foreign currency exchange.
Sales of personal protective equipment (PPE) and COVID-19 test kits in the third quarter were $175 million compared with $244 million in the prior-year period. Excluding sales of PPE and COVID-19 test kits, third-quarter internal sales growth in local currencies was 1.1% year over year.
On a geographic basis, the company recorded sales of $2.36 billion in North America, down 0.5% year over year. Sales totaled $799 million in the International market, up 15.3% year over year. Our model projected sales in North America and International regions to be $2.40 billion and $799.7 million, respectively.
Segmental Analysis
Henry Schein derives revenues from three operating segments — Dental, Medical and Technology and Value-Added Services.
Dental
In the third quarter, the company recorded $1.88 billion in global Dental sales, up 5.4% year over year. This compares with our model’s projected revenues of $1.93 billion.
The segment’s revenues included an internally generated sales decrease of 0.2% in local currencies and reflected a 0.9% decrease in North America and 0.9% growth internationally and an increase of 0.3% in local currencies, excluding sales of PPE products.
Medical
Global Medical revenues declined 3.3% year over year to $1.07 billion. Our model projected the segment’s revenues to be $1.08 billion.
The segment’s revenues included an internally generated sales increase of 0.8% in local currencies and continued to be impacted by a difficult prior-year comparison of 9.3% sales growth and a product mix shift to generic pharmaceuticals and corporate brand products.
Technology and Value-Added Services
Revenues from global Technology and Value-Added Services rose 19.3% to $210 million. Our model’s projection was $187.2 million.
The figure included 9.6% internal sales growth in local currencies and 8.6% growth from acquisitions, including Large Practice Sales LLC.
Margin Trend
In the reported quarter, the gross profit totaled $995 million, reflecting an 8.9% increase year over year. The gross margin expanded 167 basis points (bps) to 31.5%.
SG&A expenses rose 11.9% to $725 million in the quarter under review. The adjusted operating profit in the third quarter was $270 million, an increase of 1.5% year over year. Meanwhile, the adjusted operating margin contracted 13 bps year over year to 8.5%.
Liquidity Position
In the third quarter of 2023, HSIC repurchased nearly 660,000 shares of its common stock for $50 million. The company had approximately $315 million authorized and available for future stock repurchases at the end of the reported quarter.
2023 Guidance
Henry Schein provided an updated outlook for 2023, which considers the current continuing operations and recently announced acquisitions. The guidance also assumes that present foreign currency exchange rates will prevail and end markets will remain consistent with current market conditions.
For 2023, the company expects adjusted EPS in the range of $4.43-$4.71, narrowing the previous guidance range ($5.18-$5.35) for the underlying business to the $5.18-$5.26 band. The Zacks Consensus Estimate for the metric is currently pegged at $5.26.
For 2023, Henry Schein expects sales growth of nearly 1 lower compared with the 2022 figure (the earlier outlook was 1 sales growth). The Zacks Consensus Estimate for revenues is currently pegged at $12.82 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -49.61% due to these changes.
VGM Scores
At this time, Henry Schein has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Henry Schein has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Henry Schein belongs to the Zacks Medical - Dental Supplies industry. Another stock from the same industry, Dentsply International (XRAY - Free Report) , has gained 10.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Dentsply reported revenues of $947 million in the last reported quarter, representing no change year over year. EPS of $0.49 for the same period compares with $0.41 a year ago.
For the current quarter, Dentsply is expected to post earnings of $0.44 per share, indicating a change of -4.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.4% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Dentsply. Also, the stock has a VGM Score of C.
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Henry Schein (HSIC) Up 4.9% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Henry Schein (HSIC - Free Report) . Shares have added about 4.9% 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 drivers.
Henry Schein Q3 Revenues Miss, 2023 Guidance Cut
Henry Schein registered adjusted earnings per share of $1.32 in the third quarter of 2023, up 2.3% from the year-ago period’s adjusted EPS. However, the metric missed the Zacks Consensus Estimate by 0.8%.
Revenues in Detail
Henry Schein reported net sales of $3.16 billion in the third quarter, up 3.1% year over year. However, the metric lagged the Zacks Consensus Estimate by 0.9%.
The year-over-year increase included a 1.2% decrease in local currencies, 3.2% growth from acquisitions and a 1.1% increase in net sales related to foreign currency exchange.
Sales of personal protective equipment (PPE) and COVID-19 test kits in the third quarter were $175 million compared with $244 million in the prior-year period. Excluding sales of PPE and COVID-19 test kits, third-quarter internal sales growth in local currencies was 1.1% year over year.
On a geographic basis, the company recorded sales of $2.36 billion in North America, down 0.5% year over year. Sales totaled $799 million in the International market, up 15.3% year over year. Our model projected sales in North America and International regions to be $2.40 billion and $799.7 million, respectively.
Segmental Analysis
Henry Schein derives revenues from three operating segments — Dental, Medical and Technology and Value-Added Services.
Dental
In the third quarter, the company recorded $1.88 billion in global Dental sales, up 5.4% year over year. This compares with our model’s projected revenues of $1.93 billion.
The segment’s revenues included an internally generated sales decrease of 0.2% in local currencies and reflected a 0.9% decrease in North America and 0.9% growth internationally and an increase of 0.3% in local currencies, excluding sales of PPE products.
Medical
Global Medical revenues declined 3.3% year over year to $1.07 billion. Our model projected the segment’s revenues to be $1.08 billion.
The segment’s revenues included an internally generated sales increase of 0.8% in local currencies and continued to be impacted by a difficult prior-year comparison of 9.3% sales growth and a product mix shift to generic pharmaceuticals and corporate brand products.
Technology and Value-Added Services
Revenues from global Technology and Value-Added Services rose 19.3% to $210 million. Our model’s projection was $187.2 million.
The figure included 9.6% internal sales growth in local currencies and 8.6% growth from acquisitions, including Large Practice Sales LLC.
Margin Trend
In the reported quarter, the gross profit totaled $995 million, reflecting an 8.9% increase year over year. The gross margin expanded 167 basis points (bps) to 31.5%.
SG&A expenses rose 11.9% to $725 million in the quarter under review. The adjusted operating profit in the third quarter was $270 million, an increase of 1.5% year over year. Meanwhile, the adjusted operating margin contracted 13 bps year over year to 8.5%.
Liquidity Position
In the third quarter of 2023, HSIC repurchased nearly 660,000 shares of its common stock for $50 million. The company had approximately $315 million authorized and available for future stock repurchases at the end of the reported quarter.
2023 Guidance
Henry Schein provided an updated outlook for 2023, which considers the current continuing operations and recently announced acquisitions. The guidance also assumes that present foreign currency exchange rates will prevail and end markets will remain consistent with current market conditions.
For 2023, the company expects adjusted EPS in the range of $4.43-$4.71, narrowing the previous guidance range ($5.18-$5.35) for the underlying business to the $5.18-$5.26 band. The Zacks Consensus Estimate for the metric is currently pegged at $5.26.
For 2023, Henry Schein expects sales growth of nearly 1 lower compared with the 2022 figure (the earlier outlook was 1 sales growth). The Zacks Consensus Estimate for revenues is currently pegged at $12.82 billion.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -49.61% due to these changes.
VGM Scores
At this time, Henry Schein has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Henry Schein has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Henry Schein belongs to the Zacks Medical - Dental Supplies industry. Another stock from the same industry, Dentsply International (XRAY - Free Report) , has gained 10.3% over the past month. More than a month has passed since the company reported results for the quarter ended September 2023.
Dentsply reported revenues of $947 million in the last reported quarter, representing no change year over year. EPS of $0.49 for the same period compares with $0.41 a year ago.
For the current quarter, Dentsply is expected to post earnings of $0.44 per share, indicating a change of -4.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -3.4% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #4 (Sell) for Dentsply. Also, the stock has a VGM Score of C.