Henry Schein (NasdaqGS:HSIC) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Henry Schein, Inc. (NasdaqGS:HSIC) is scheduled to report Q3 earnings results before markets open for trading on November 2, 2020.

The company is expected to report earnings of $0.77/share on revenue of $2.446 billion. The consensus earnings per share (EPS) of $0.77/share is based on a poll of 15 analysts and represents a decline in eps of −14.9% over the same quarter last year, when the company reported earnings of $0.90/share.

The revenue forecast of $2.446 billion based on a poll of 14 analysts implies a year-over-year (YoY) decline in revenue of −2.5%. Last year the company reported $2.509 billion in revenue for the quarter.

Expected to report EPS contraction of −14.9% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $2,446.44 $2,508.77 −2.5%
EPS $0.77 $0.90 −14.9%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 8 tracked quarters of exceeding earnings guidance.

What are your expectations from Henry Schein, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.12 $0 100% Beat
Q1, 2020 $0.74 $0.94 27.5% Beat
Q4, 2019 $0.91 $0.97 6.5% Beat
Q3, 2019 $0.86 $0.90 5.1% Beat
Q2, 2019 $0.83 $0.84 1.4% Beat
Q1, 2019 $0.76 $0.80 5.1% Beat
Q4, 2018 $1.11 $1.12 1.0% Beat
Q3, 2018 $1.01 $1.03 2.4% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 27, 2020, the stock price reacted by falling −5.3%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 4, 2020 $70.90 $67.13 −5.3% Decline
May 5, 2020 $52.49 $52.69 0.4% Increase
February 20, 2020 $73.71 $67.54 −8.4% Decline
November 5, 2019 $65.73 $68.60 4.4% Increase

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.56, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.56 implies a 0.5% chance of earnings manipulation.

Fundamentals And Technical Analysis

Henry Schein, Inc. is currently trading at $66.87/share, down −1.4% for the day. The company is trading at approximately 90.4% of its 52-week high of $73.99/share. The company’s stock price is down −0.4% since the last earnings report and up 7.0% over the previous week.

The company’s 14 Day Relative Price Index (RSI) of 63.98 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NasdaqGS:HSIC Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 16.33 and a forward P/E multiple of 26.30.

Henry Schein, Inc.’s current share price also implies a price-to-book (P/B) multiple of 3.19. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 27, 2020
Stock Price (Current) $66.87
P/E Ratio 16.3x
P/E Ratio (Fwd) 26.3x
PEG Ratio 0.6
Total Debt / Total Capital 11.3%
Levered Free Cash Flow $448.2 million
EV / EBITDA 14.7x

Finbox

Henry Schein, Inc. is a mid-cap stock with a market capitalization of $9.547 billion and a total enterprise value of $11.514 billion. The company operates in the Healthcare sector and the Healthcare Providers & Services industry.

Henry Schein, Inc., a solutions company for health care professionals, provides health care products and services to office-based dental practitioners and laboratories, physician practices, government, institutional health care clinics, and other alternate care clinics worldwide. It operates in two segments, Health Care Distribution, and Technology and Value-Added Services. The Health Care Distribution segment offers dental products, including infection-control products, handpieces, preventatives, impression materials, composites, anesthetics, teeth, dental implants, gypsum, acrylics, articulators, abrasives, dental chairs, delivery units and lights, X-ray supplies and equipment, and high-tech and digital restoration equipment, as well as equipment repair services. This segment also provides medical products comprising branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products, X-ray products, equipment, and vitamins. The Technology and Value-Added Services segment offers software, technology, and other value-added services that include practice management software systems for dental and medical practitioners. This segment also provides value-added practice solutions, which comprise financial services on a non-recourse basis, e-services, practice technology, network, and hardware services, as well as continuing education services for practitioners. Henry Schein, Inc. was founded in 1932 and is headquartered in Melville, New York.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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