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Henry Schein (HSIC) Up 5.3% Since Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Henry Schein, Inc. (HSIC - Free Report) . Shares have added about 5.3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Henry Schein Tops Q1 Earnings, Reaffirms '17 View
Henry Schein reported adjusted earnings per share (EPS) of $1.76 in the first quarter of 2017, up 24.8% year over year. Adjusted EPS also surpassed the Zacks Consensus Estimate of $1.66. The year-over-year upside in earnings was driven by strong revenue growth.
Henry Schein’s reported net income in the first quarter came in at $140.7 million or $1.76 per share, reflecting year-over-year growth of 23.7% and 28.5%, respectively.
Revenues in Detail
Henry Schein reported revenues of $2.92 billion in the first quarter, up 7.7% year over year and also above the Zacks Consensus Estimate of $2.83 billion. The year-over-year improvement came on the back of 8.7% growth in local currencies and a 1.0% decline owing to foreign currency exchange. At local currencies, internally generated sales increased 5.9% and acquisition growth was 2.8%.
The company recorded year-over-year sales growth of 5.6% or $1.94 billion in the North American market and 12.3% or $980.7 million in the international market.
Segment Analysis
Henry Schein derives revenues from four operating segments: Dental, Medical, Animal Health, Technology and Value-added services.
In the first quarter, the company derived $1.40 billion in revenues from global Dental sales, up 7.9% year over year. This includes 8.2% growth in local currencies and 0.3% decline related to foreign currency exchange. At local currencies, internally generated sales increased 2.9% and acquisition growth was 5.3%. Internal growth at local currencies included 0.8% growth in North America and 6.8% rise internationally.
The company's global Animal Health segment witnessed 5.4% improvement in revenues to $812.9 million. This includes 8.1% growth in local currencies and 2.7% decline related to foreign currency exchange. At local currencies, internally generated sales increased 7.1% and acquisition growth was 1.0%. The 7.1% internal growth in local currencies included 5.5% growth in North America and 8.9% growth internationally.
Worldwide Medical sales scaled 11.3% year over year to $598.9 million. Internal sales growth in local currencies was 11.5%, with a 0.2% decrease owing to adverse foreign exchange.
Revenues from global Technology and Value-added Services grew 4.2% to $106.0 million. This included 5.5% growth in local currencies and a 1.3% decline related to foreign currency exchange. There was no contribution from acquisitions during the quarter under review.
Margin Trends
Gross profit increased 5.8% to $822.9 million in the reported quarter. However, gross margin declined 52 basis points (bps) from the year-ago quarter to 28.2%, due to an 8.5% rise in cost of sales, higher than the revenue growth rate.
On the back of a 5.2% rise in selling, general & administrative expenses of $628.9 million, adjusted operating income improved 7.6% year over year to $193.9 million. However, adjusted operating margin declined 1 bps to 6.6% in the reported quarter.
Financial Position
Henry Schein exited first-quarter 2017 with cash and cash equivalents of $62.8 million, compared with $62.3 million at the end of fiscal 2016. As of Apr 1, 2017, the company used cash of $52.5 million in operating activities, compared with $77.7 million at the end of Mar 26, 2016.
During the quarter under review, the company bought back approximately 308,000 shares for almost $50 million. At the close of the fourth quarter, the company had $200 million authorized for future repurchases of its common stock.
2017 EPS Guidance Intact
Henry Schein reaffirmed its 2017 reported EPS guidance. The company still expects to deliver EPS in the range of $7.17–$7.30, reflecting 16–18% growth from the 2016 EPS figure of $6.19.
The Zacks Consensus Estimate for 2017 adjusted EPS is $7.25.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, Henry Schein's stock has a subpar Growth Score of 'D'. However, its Momentum is doing a bit better with a 'C'. The stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is more suitable for value investors than momentum investors based on our style scores.
Outlook
The stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months
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Henry Schein (HSIC) Up 5.3% Since Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Henry Schein, Inc. (HSIC - Free Report) . Shares have added about 5.3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Henry Schein Tops Q1 Earnings, Reaffirms '17 View
Henry Schein reported adjusted earnings per share (EPS) of $1.76 in the first quarter of 2017, up 24.8% year over year. Adjusted EPS also surpassed the Zacks Consensus Estimate of $1.66. The year-over-year upside in earnings was driven by strong revenue growth.
Henry Schein’s reported net income in the first quarter came in at $140.7 million or $1.76 per share, reflecting year-over-year growth of 23.7% and 28.5%, respectively.
Revenues in Detail
Henry Schein reported revenues of $2.92 billion in the first quarter, up 7.7% year over year and also above the Zacks Consensus Estimate of $2.83 billion. The year-over-year improvement came on the back of 8.7% growth in local currencies and a 1.0% decline owing to foreign currency exchange. At local currencies, internally generated sales increased 5.9% and acquisition growth was 2.8%.
The company recorded year-over-year sales growth of 5.6% or $1.94 billion in the North American market and 12.3% or $980.7 million in the international market.
Segment Analysis
Henry Schein derives revenues from four operating segments: Dental, Medical, Animal Health, Technology and Value-added services.
In the first quarter, the company derived $1.40 billion in revenues from global Dental sales, up 7.9% year over year. This includes 8.2% growth in local currencies and 0.3% decline related to foreign currency exchange. At local currencies, internally generated sales increased 2.9% and acquisition growth was 5.3%. Internal growth at local currencies included 0.8% growth in North America and 6.8% rise internationally.
The company's global Animal Health segment witnessed 5.4% improvement in revenues to $812.9 million. This includes 8.1% growth in local currencies and 2.7% decline related to foreign currency exchange. At local currencies, internally generated sales increased 7.1% and acquisition growth was 1.0%. The 7.1% internal growth in local currencies included 5.5% growth in North America and 8.9% growth internationally.
Worldwide Medical sales scaled 11.3% year over year to $598.9 million. Internal sales growth in local currencies was 11.5%, with a 0.2% decrease owing to adverse foreign exchange.
Revenues from global Technology and Value-added Services grew 4.2% to $106.0 million. This included 5.5% growth in local currencies and a 1.3% decline related to foreign currency exchange. There was no contribution from acquisitions during the quarter under review.
Margin Trends
Gross profit increased 5.8% to $822.9 million in the reported quarter. However, gross margin declined 52 basis points (bps) from the year-ago quarter to 28.2%, due to an 8.5% rise in cost of sales, higher than the revenue growth rate.
On the back of a 5.2% rise in selling, general & administrative expenses of $628.9 million, adjusted operating income improved 7.6% year over year to $193.9 million. However, adjusted operating margin declined 1 bps to 6.6% in the reported quarter.
Financial Position
Henry Schein exited first-quarter 2017 with cash and cash equivalents of $62.8 million, compared with $62.3 million at the end of fiscal 2016. As of Apr 1, 2017, the company used cash of $52.5 million in operating activities, compared with $77.7 million at the end of Mar 26, 2016.
During the quarter under review, the company bought back approximately 308,000 shares for almost $50 million. At the close of the fourth quarter, the company had $200 million authorized for future repurchases of its common stock.
2017 EPS Guidance Intact
Henry Schein reaffirmed its 2017 reported EPS guidance. The company still expects to deliver EPS in the range of $7.17–$7.30, reflecting 16–18% growth from the 2016 EPS figure of $6.19.
The Zacks Consensus Estimate for 2017 adjusted EPS is $7.25.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
Henry Schein, Inc. Price and Consensus
Henry Schein, Inc. Price and Consensus | Henry Schein, Inc. Quote
VGM Scores
At this time, Henry Schein's stock has a subpar Growth Score of 'D'. However, its Momentum is doing a bit better with a 'C'. The stock was allocated a grade of 'B' on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is more suitable for value investors than momentum investors based on our style scores.
Outlook
The stock has a Zacks Rank #2 (Buy). We are looking for an above average return from the stock in the next few months