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Shares of Henry Schein (HSIC) have been strong performers lately, with the stock up 15.8% over the past month. The stock hit a new 52-week high of $80.09 in the previous session. Henry Schein has gained 19.5% since the start of the year compared to the -0.5% move for the Zacks Medical sector and the 10.5% return for the Zacks Medical - Dental Supplies industry.
What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on May 4, 2021, Henry Schein reported EPS of $1.24 versus consensus estimate of $0.83 while it beat the consensus revenue estimate by 3.55%.
For the current fiscal year, Henry Schein is expected to post earnings of $3.69 per share on $11.6 billion in revenues. This represents a 24.24% change in EPS on a 14.63% change in revenues. For the next fiscal year, the company is expected to earn $4.06 per share on $11.81 billion in revenues. This represents a year-over-year change of 10.18% and 1.85%, respectively.
Henry Schein may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company has run ahead of itself.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Henry Schein has a Value Score of B. The stock's Growth and Momentum Scores are B and D, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 21.7X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 18.7X versus its peer group's average of 17.9X. Additionally, the stock has a PEG ratio of 2.18. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Henry Schein currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Henry Schein meets the list of requirements. Thus, it seems as though Henry Schein shares could have potential in the weeks and months to come.
How Does Henry Schein Stack Up to the Competition?
Shares of Henry Schein have been soaring, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including DENTSPLY SIRONA (XRAY), West Pharmaceutical Services (WST), and SARTORIUS (SARTF), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 35% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Henry Schein, even beyond its own solid fundamental situation.
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Henry Schein, Inc. (HSIC) : Free Stock Analysis Report
DENTSPLY SIRONA Inc. (XRAY) : Free Stock Analysis Report
West Pharmaceutical Services, Inc. (WST) : Free Stock Analysis Report
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