Henry Schein, Inc.HSIC is scheduled to report its first-quarter 2015 results before the opening bell on May 4, 2015.
Last quarter, Henry Schein’s adjusted EPS had topped the Zacks Consensus Estimate by 3.31% and improved 9.1% on a year-over-year basis. Revenues had improved 7% from the year-ago quarter, fallingin line with the Zacks Consensus Estimate.
Henry Schein’s trailing four-quarter average earnings beat is 2.88%. Let’s see how things are shaping up for this announcement.
Factors at Play
Henry Schein’s revenue growth has been consistently supported by niche acquisitions that provide access to additional product lines. The company’s acquisition of ADS Florida in Jan 2015 is expected to expand the geographical reach of its practice transition offerings to dental practice owners. We believe the benefits of this acquisition will be reflected in the company’s dental business segment’s top line outcome in the upcoming first quarter results.
At present, it’s a known fact that the U.S. dollar has been gaining strength. This is a huge concern for companies like Henry Schein which earns a significant amount of its revenue from the international market. Despite that, management expects the company’s adjusted EPS growth to accelerate through2015. This acceleration reflects continued leveraging of Henry Schein’s infrastructure and controlling of expenses, as well as realizing efficiencies from recently acquired acquisitions.
Besides, management is optimistic about the company’s performance in the emerging markets and believes that Asia and other emerging markets are growing at a faster pace compared to developed nations. The company continues to expect to increase its presence, particularly in the markets of Japan, Brazil and South Africa; in the near as well as long term.
Management also believes that the company’s heavy investments in Europe, Australia and New Zealand will soon pay off in terms of expanded distribution, improved value-added services and advancing unique products.
However, these positive factors are not without the threat of the current economic scenario, a tough competitive landscape and particularly, currency headwind, which is expected to hamper overall revenue growth during the to-be-reported quarter.
Earnings Whispers
Our proven model does not conclusively show that Henry Schein is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 for this to happen. That is not the case here, as you will see below.
Zacks ESP: Earnings ESP for Henry Schein is -1.56%, since the Most Accurate estimate stands at $1.26 and the Zacks Consensus Estimate is pegged higher at $1.28.
Zacks Rank: Henry Schein has a Zacks Rank #3 (Hold) which increases the predictive power of ESP. However, a -1.56% ESP makes surprise prediction difficult.
Note that we caution against stocks with Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks to Consider
Here are three companies you may want to consider, as our model shows they have the right combination of elements to post an earnings beat this quarter:
HCA Holdings, Inc. HCA has an earnings ESP of +0.75% and a Zacks Rank #1.
Mirati Therapeutics, Inc. MRTX has an earnings ESP of +2.82% and a Zacks Rank #2.
Myriad Genetics Inc. MYGN has an earnings ESP of +2.50% and a Zacks Rank #3.
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