Henry Schein, Inc. (NASDAQ:HSIC) shares fell 6.4% to US$67.54 in the week since its latest annual results. It looks like a credible result overall - although revenues of US$10.0b were what analysts expected, Henry Schein surprised by delivering a (statutory) profit of US$4.65 per share, an impressive 38% above what analysts had forecast. Earnings are an important time for investors, as they can track a company's performance, look at what top analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we gathered the latest post-earnings forecasts to see what analysts' statutory forecasts suggest is in store for next year.
Taking into account the latest results, the current consensus from Henry Schein's 15 analysts is for revenues of US$10.3b in 2020, which would reflect a reasonable 3.3% increase on its sales over the past 12 months. Statutory earnings per share are expected to crater 22% to US$3.69 in the same period. Yet prior to the latest earnings, analysts had been forecasting revenues of US$10.3b and earnings per share (EPS) of US$3.69 in 2020. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
It will come as no surprise then, to learn that the consensus price target is largely unchanged at US$69.31. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. There are some variant perceptions on Henry Schein, with the most bullish analyst valuing it at US$80.00 and the most bearish at US$56.00 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Further, we can compare these estimates to past performance, and see how Henry Schein forecasts compare to the wider market's forecast performance. We can infer from the latest estimates that analysts are expecting a continuation of Henry Schein's historical trends, as next year's forecast 3.3% revenue growth is roughly in line with 3.8% annual revenue growth over the past five years. Compare this with the wider market (in aggregate), which analyst estimates suggest will see revenues fall 6.7% next year. So it's pretty clear that Henry Schein is expected to grow slower than similar companies in the same market.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with analysts reconfirming that earnings per share are expected to continue performing in line with their prior expectations. Fortunately, analysts also reconfirmed their revenue estimates, suggesting sales are tracking in line with expectations - although our data does suggest that Henry Schein's revenues are expected to perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At Simply Wall St, we have a full range of analyst estimates for Henry Schein going out to 2024, and you can see them free on our platform here..
It might also be worth considering whether Henry Schein's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at email@example.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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