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Looking at Henry Schein, Inc.'s (NASDAQ:HSIC) earnings update in March 2019, analyst forecasts appear to be pessimistic, with profits predicted to drop by 2.3% next year compared with the past 5-year average growth rate of 0.2%. With trailing-twelve-month net income at current levels of US$536m, the consensus growth rate suggests that earnings will decline to US$524m by 2020. I will provide a brief commentary around the figures and analyst expectations in the near term. For those interested in more of an analysis of the company, you can research its fundamentals here.
What can we expect from Henry Schein in the longer term?
Over the next three years, it seems the consensus view of the 19 analysts covering HSIC is skewed towards the positive sentiment. Broker analysts tend to forecast up to three years ahead due to a lack of clarity around the business trajectory beyond this. To reduce the year-on-year volatility of analyst earnings forecast, I've inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
This results in an annual growth rate of 5.7% based on the most recent earnings level of US$536m to the final forecast of US$597m by 2022. EPS reaches $4.22 in the final year of forecast compared to the current $3.51 EPS today. With a current profit margin of 4.1%, this movement will result in a margin of 5.5% by 2022.
Future outlook is only one aspect when you're building an investment case for a stock. For Henry Schein, I've put together three essential aspects you should further examine:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Henry Schein worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Henry Schein is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Henry Schein? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.