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Henry Schein (HSIC) Enters S&P 500, Shares Up - Analyst Blog

New York-based healthcare provider, Henry Schein, Inc.HSIC , recently declared that it has been selected by S&P Dow Jones Indices to join the prestigious Standard & Poor's (S&P) 500 Index.

The company joined the much sought-after index after the close of trading on Mar 17, 2015, expectedly replacing health technology company, CareFusion Corp.

Consequent to the news release, Henry Schein's shares traded up 2.8% and eventually hit $143.01 on Friday, translating into a decent one-year return of 22.04%. The year-to-date return on the stock is roughly 5.04%. Currently, this company owns a market cap of approximately $12 billion. Average volume of shares traded over the past one day is roughly 0.7 million.

Management at Henry Schein expressed its excitement regarding the company's addition to the S&P 500, which lists 500 leading companies trading on the NYSE or Nasdaq and captures approximately 80% coverage of available market capitalization.

Last quarter, the company had delivered a positive surprise of 3.31%. Notably, in all of the past four quarters, Henry Schein's earnings have outpaced the Zacks Consensus Estimate with an average beat of 2.88%.

The company's solid performance reflects its consistent growth via organic and inorganic means across all its segments. Based on its strong fundamentals, Henry Schein continues to return cash to its shareholders through dividend payments and share repurchases. During the fourth quarter, Henry Schein bought back approximately 595,000 shares for $73.7 million and was left with $300 million of future repurchase authorization.

Henry Schein's revenue growth has been consistently supported by niche acquisitions. Evidently, the company had undertaken back-to-back acquisitions in 2014. During the fourth quarter, Henry Schein experienced broader global expansion of its businesses, particularly the dental and animal health segments.

On the animal health front, the company has expanded its equipment capabilities with additional capacities, mostly in the markets of North America and Europe. The acquisition of scil animal care in Jan 2015 has duly fulfilled this purpose.

Some significant names on the company's acquisition list are ADS Florida, California-based The Maddox Practice Group, Iwase Dental in Japan, Dental Speed Graph in Brazil, Sirona Direct and several investments in France. All of these should drive planned expansion of Henry Schein's global footprint and help accelerate growth in the long run.

We believe the company's healthy cash balance and the prospective acquisitions made lately must have encouraged S&P Dow Jones Indices to select Henry Schein as an apt member of the S&P 500.

Currently, Henry Schein carries a Zacks Rank #3 (Hold). Some better-ranked med-dental/supply stocks are AmerisourceBergen Corporation ABC , Laboratory Corp. of America Holdings LH and Cardinal Health, Inc. CAH . While AmerisourceBergen sports a Zacks Rank #1 (Strong Buy), Cardinal Health and Laboratory Corp. hold a Zacks Rank #2 (Buy).

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HENRY SCHEIN IN (HSIC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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