Henry Schein, Inc. (HSIC - Free Report) is scheduled to report third-quarter 2019 results on Nov 5, before market open. In the last reported quarter, the company’s earnings beat the Zacks Consensus Estimate by 1.2%. Overall, the metric surpassed estimates in each of the trailing four quarters, the average positive surprise being 2.3%.
Let’s see how things are shaping up prior to this announcement.
Factors at Play
In the third quarter, Henry Schein is expected to have witnessed solid growth across all segments, namely, Dental, Medical and Technology plus Value-Added Services. Meanwhile geographically, the company is gaining traction in all regions. We expect this trend to get reflected in the upcoming quarterly results.
Favorable Dental Business Trend: The company has been making concerted efforts to expand in the field of digital dentistry globally. It is well-positioned to benefit from the ongoing phase of digitalization in the international dental market.
Within North America, the company has been witnessing strong sales of CAD/CAM solutions lately. Internationally, CAD/CAM equipment sales registered double-digit growth during the last-reported quarter. This trend is expected to have continued through the third quarter. The robust performance of the Primescan system in Europe and the United States is also expected to have contributed to the company’s top line during the to-be-reported quarter.
In June 2019, the company acquired Hayes Handpiece franchise, a leading provider of dental handpiece products and services in the United States, Canada, and the United Kingdom. Recently, the company took over Cliniclands, which caters to dentists in Sweden, Denmark and Norway by providing dental consumables, implants, prosthetic, and orthodontic solutions and equipment. These acquisitions are expected to have driven the dental business of the company in the third quarter.
The Zacks Consensus Estimate for third-quarter North American dental revenues is pegged at $977 million, suggesting a 2.7% rise from the year-ago reported figure. The consensus estimate for international Dental revenues stands at $641 million, implying 13.9% growth from the prior-year reported number.
Strong Technology and Value-Added Services Business: Henry Schein is steadily progressing with an array of product launches within this business. The company’s third-quarter performance is expected to have benefited from consistent contribution of its joint venture (JV) with Internet Brands on dental technology that resulted in the formation of Henry Schein One. In recent times, Henry Schein One rolled out several key platform updates for patient engagement, patient financing and clinical decision support solutions. In July 2019, the company acquired Italian dental practice management software company, Elite Computer Italia. The recent acquisitions of Lighthouse, a provider of easy-to-use dental practice management patient communication software, and Kopfwerk, a leading dental practice management solution company in Austria, are also projected to have contributed to the company’s top line in the third quarter.
Growing Medical and Animal Health Business: Henry Schein is consistently working to boost its Medical segment. Its worldwide Medical revenues rose 7.6% year over year in the second quarter. We expect to see another quarter of strong organic growth from the existing customer base and new patient traffic. The recent acquisition of North American Rescue, a leading provider of mission-critical medical products for the defense and Public Safety markets, is likely to show on the upcoming quarterly results.
Meanwhile, the company completed the spin-off of its global Animal Health business in February 2019 which has in all probability impacted the segment’s performance in third-quarter 2019.
Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. That is exactly the case here as you will see below.
Earnings ESP: Henry Schein has an Earnings ESP of +0.87%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Henry Schein carries a Zacks Rank #3.
Other Stocks Worth a Look
Here are a few other medical stocks worth considering from the same space with the right mix of elements to surpass expectations this earnings season.
DENTSPLY SIRONA (XRAY - Free Report) has an Earnings ESP of +5.05% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
AmerisourceBergen Company (ABC - Free Report) has an Earnings ESP of +0.55% and a Zacks Rank #3.
Cardinal Health, Inc. (CAH - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank #3.
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