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US Equities · Finance research note

HSIC — Henry Schein

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2. Company Fundamentals

2.1 Competitiveness

Metric Value
Operating Margins 5.85%
Profit Margins 2.95%
Return on Equity 8.76%
Return on Assets 4.35%
Free Float 0.09B
Short Int % Utilisation 8.63%

2.2 Growth

Metric Value
Revenue Growth 6.3%
Free Cash Flow 0.29B
EBITDA 13.5 (Ratio)
Enterprise Value 14.15B
EV/Revenue 1.06
EV/EBITDA 13.5

Revenue growth of 6.3% indicates steady, moderate expansion.

2.3 Management

Role Metric
Consensus Rating N/A

2.4 Return

Metric Value
Expected Return (Ann.)* 37.14%
Risk / Std Dev (Ann.)* 26.10%
1-Year Price Return* 32.33%

Latest Market Data (as of 2026-08-14, US Eastern time):

Metric Value
Last Price $89.77
52-Week Range $61.95 – $92.18
Observation Count 251 trading days

The return and risk statistics use daily adjusted closes from the retrieved one-year series and annualise daily moments using 252 trading days. The last price is the latest regular-market price reported for the stated date. Source: Yahoo Finance market data.

DuPont Model Analysis

The DuPont model decomposes return on equity (ROE) into three operating and capital-structure drivers:

ROE = Net Margin × Asset Turnover × Equity Multiplier

The comparison uses the latest two comparable annual periods available for the issuer, with reported statement amounts shown in US$. Revenue and net income are income-statement flows; total assets and shareholders’ equity are year-end balance-sheet figures. This is a simplified year-end-balance DuPont comparison rather than an average-balance ROE calculation.

DuPont component Calculation FY2025 FY2024
Revenue Reported revenue $13.18B $12.67B
Net income Reported net income $398.00M $390.00M
Total assets Year-end reported balance $11.21B $10.22B
Shareholders’ equity Year-end reported balance $3.25B $3.39B
Net margin Net income ÷ revenue 3.02% 3.08%
Asset turnover Revenue ÷ total assets 1.1756x 1.2403x
Equity multiplier Total assets ÷ shareholders’ equity 3.4561x 3.0115x
ROE Net margin × asset turnover × equity multiplier 12.27% 11.49%

Source: Yahoo Finance annual statements. Values are based on the two latest comparable annual periods returned by the source; fiscal period labels use the statement period-end year.

2.5 FCFF DCF Valuation

Valuation basis: This research model follows a five-year, unlevered FCFF DCF. It starts from reported annual operating inputs, forecasts revenue and operating cash conversion under an explicit mechanical policy, discounts FCFF at WACC, applies a Gordon-growth terminal value, and bridges enterprise value to an indicative common-equity value per share. It is an analytical estimate rather than a recommendation or personalised target price.

Step 1 — Forecast Operating Profit and NOPAT

Reported operating input Value
Revenue $13.18B
Prior annual revenue $12.67B
EBIT $683.00M
Tax rate 23.70%
NOPAT = EBIT × (1 − tax rate) $521.13M
Forecast start-growth basis 4.03%
Forecast policy latest reported annual revenue growth, bounded to -10.00% / 15.00%

Step 2 — Calculate FCFF

Current FCFF building block Value
NOPAT $521.13M
Add: depreciation & amortisation $281.00M
Less: capital expenditure -$191.00M
Less/(add): working-capital cash-flow movement -$48.00M
Current unlevered FCFF $563.13M

Explicit FCFF forecast

Forecast year Revenue growth NOPAT D&A Capex Change in NWC FCFF Present value
1 4.03% $542.14M $292.33M -$198.70M -$49.94M $585.84M $564.35M
2 3.65% $561.93M $303.00M -$230.21M -$51.76M $582.95M $521.14M
3 3.27% $580.28M $312.89M -$262.79M -$53.45M $576.94M $478.64M
4 2.88% $597.01M $321.92M -$296.14M -$54.99M $567.80M $437.14M
5 2.50% $611.93M $329.96M -$329.96M -$56.36M $555.57M $396.93M

Step 3 — Determine the Discount Rate (WACC)

WACC input Value
Risk-free rate 4.71%
Equity risk premium assumption 5.50%
Beta 0.81
Cost of equity 9.16%
Pre-tax cost of debt 4.76%
WACC 7.76%
WACC validation within standard range

Step 4 — Estimate Terminal Value

Terminal-value input Value
Perpetuity growth rate 2.50%
Terminal value $10.83B
Implied terminal EV / EBITDA 9.57x
Terminal value as % of enterprise value 75.66%

Step 5 — Discount Cash Flows to Enterprise Value

Enterprise-value component Value
Present value of explicit FCFF $2.40B
Present value of terminal value $7.45B
Indicated enterprise value $9.85B
Discounting convention mid-year for explicit FCFF; terminal value discounted at year-end five

Step 6 — Convert Enterprise Value to Equity Value

Equity bridge Value
Indicated enterprise value $9.85B
Less: gross interest-bearing debt $3.44B
Add: cash and equivalents $156.00M
Add: affiliate investments $0.00
Less: minority interests $1.55B
Indicated common equity value $5.02B

Step 7 — Calculate Indicative Value Per Share

Per-share output Value
Shares used 121,717,876.00
Share-count basis reported diluted weighted-average shares
Current market price $89.07
DCF indicative value per share $41.27
Indicative value vs. market price -53.67%

Model Integrity Checks

Check Result
Perpetuity growth is below the risk-free rate pass
Perpetuity growth is below WACC pass
WACC is within the configured operating-company range pass
Terminal-year FCFF is positive pass
Terminal capex converges to D&A pass
Terminal-value concentration within review band
Implied price differs from spot by more than 30% review required

2.6 Investor-Style Research Screen

Educational screen Result
Buffett-inspired cash-quality checks 3/4 evidenced checks
Lynch-inspired balance-and-growth checks 3/4 evidenced checks

Data lineage: Yahoo Finance public market and reported-statement data; retrieval timestamp: 2026-08-18 17:36:56.156511 UTC; latest reported fiscal period: 2025-12-31 00:00:00. Default assumptions: five-year forecast, mid-year discounting for explicit FCFF, a maximum 2.50% perpetuity-growth rate below both WACC and the risk-free rate, historical operating-ratio persistence, and capex convergence to D&A by year five. No sell-side consensus or management guidance is substituted for reported inputs. This is research and analysis only, not personalized financial advice.

2.7 Quantitative Factor Diagnostics

Model basis: Daily issuer USD excess returns are regressed in-sample using ordinary least squares on matching regional Fama–French factors. FF3 estimates market, size, and value loadings; FF5 adds profitability and investment. Coefficients are descriptive historical exposures, not predictions.

Estimation input Value
Regional factor set US
Factor-return currency USD
Issuer-return basis USD adjusted total return
Estimation window 2025-08-19 to 2026-06-30
Aligned daily observations 217
Minimum observation requirement 120
Currency conversion for HK listings not required

Fama–French Three-Factor and Five-Factor Results

Diagnostic FF3 FF5
Annualised alpha 6.89% 31.22%
Adjusted R² 0.15 0.27
Annualised residual volatility 24.47% 22.61%
Factor loading (t-statistic) FF3 FF5
Market excess return (Mkt-RF) 0.48 (3.31) 0.92 (6.02)
Size (SMB) 0.76 (3.89) 0.73 (3.75)
Value (HML) 0.22 (1.31) -0.28 (-1.48)
Profitability (RMW) NM 0.71 (4.38)
Investment (CMA) NM 0.87 (3.08)

Definitions: Mkt-RF is the market return less the risk-free rate; SMB is small minus big; HML is high minus low book-to-market; RMW is robust minus weak profitability; CMA is conservative minus aggressive investment. Factor returns are sourced from the Kenneth R. French Data Library; issuer adjusted-return history is sourced from Yahoo Finance. For Hong Kong listings, adjusted HKD prices are converted into USD with daily USD/HKD closes before return calculation to match the USD regional factor basis. This is an in-sample historical regression; coefficients and t-statistics do not establish causation or predict future returns. This is research and analysis only, not personalized financial advice.

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