On Nov 20, 2014, we issued an updated research report on Henry Schein Inc. (HSIC), a leading distributor of health care products and services across the globe. Henry Schein successfully retained its track record of healthy quarterly performances. The company posted yet another quarter with both earnings and revenues sailing past the respective Zacks Consensus Estimate.
Henry Schein’s adjusted earnings per share (EPS) of $1.34 in the third quarter of 2014 increased 9.8% year over year and also beat the Zacks Consensus Estimate by 2.3%. Likewise, revenues rose 11.7% to $2.62 billion, edging past the Zacks Consensus Estimate by 2.54%.
Year-over-year growth at both fronts is indicative of the company’s consistent growth via organic and inorganic means. We are, at the same time, encouraged by the global performance of the company during the third quarter. The stock currently carries a Zacks Rank #3 (Hold).
The company gained market share in all its four business groups, with each group posting strong sales growth, both in North America as well as in the overseas market. Currently, management is investing in growth opportunities that will enable Henry Schein to introduce new product categories, improve operating margin by enhancing operational inefficiencies, and develop new technology solutions and other value-added services that will improve the customer experience and elevate the company’s position in the marketplace.
Bolstered by its huge future growth opportunities, Henry Schein raised the lower end of its EPS guidance for 2014 which further boosted investor confidence in the stock. Evidently, Henry Schein's share price has jumped 8.3% since the earnings release.
We are also impressed with the strong, consistent growth at Henry Schein despite it being subjected to unfavorable market conditions. Since 2009, revenues have seen a CAGR of 10% with earnings CAGR touching the 12% mark. We are encouraged to note that the company promises to achieve a 1–2% faster organic growth rate than the end market.
Key Picks in the Sector
Better-ranked stocks that warrant a look in the broader medical sector include AmerisourceBergen Corporation (ABC), CR Bard Inc. (BCR) and Steris Corp. (STE). All these stocks carry a Zacks Rank #2 (Buy).
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