Should Value Investors Buy Henry Schein (HSIC) Stock?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
Henry Schein (HSIC) is a stock many investors are watching right now. HSIC is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 12.82, which compares to its industry's average of 18.35. Over the past 52 weeks, HSIC's Forward P/E has been as high as 17.87 and as low as 12.82, with a median of 14.58.
Investors should also recognize that HSIC has a P/B ratio of 2.24. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 4.71. Over the past year, HSIC's P/B has been as high as 2.95 and as low as 2.14, with a median of 2.53.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. HSIC has a P/S ratio of 0.74. This compares to its industry's average P/S of 1.15.
Finally, investors will want to recognize that HSIC has a P/CF ratio of 14.07. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. HSIC's P/CF compares to its industry's average P/CF of 18.86. Over the past year, HSIC's P/CF has been as high as 16.50 and as low as 10.70, with a median of 14.60.
Another great Medical - Dental Supplies stock you could consider is McKesson (MCK), which is a # 2 (Buy) stock with a Value Score of A.
McKesson is trading at a forward earnings multiple of 15.62 at the moment, with a PEG ratio of 1.47. This compares to its industry's average P/E of 18.35 and average PEG ratio of 1.68.
Over the past year, MCK's P/E has been as high as 15.88, as low as 12.75, with a median of 14.56; its PEG ratio has been as high as 1.56, as low as 1.23, with a median of 2.04 during the same time period.
McKesson sports a P/B ratio of -49.53 as well; this compares to its industry's price-to-book ratio of 4.71. In the past 52 weeks, MCK's P/B has been as high as -21.98, as low as -50.32, with a median of -40.24.
These are only a few of the key metrics included in Henry Schein and McKesson strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, HSIC and MCK look like an impressive value stock at the moment.
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Henry Schein, Inc. (HSIC) : Free Stock Analysis Report
McKesson Corporation (MCK) : Free Stock Analysis Report
