In response to the company's third-quarter earnings, shares of Henry Schein (NASDAQ:HSIC), a maker of medical products that are primarily used by dentists and veterinarians, fell as much as 10% in afternoon trading on Monday.
Here's a look at the headline numbers from the quarter:
- Revenue grew 10% to $3.16 billion. That was better than the $3.05 billion that market watchers had expected. Management stated that organic growth was 4.8%, acquisitions added 4%, and currency movements tacked on another 1.5%.
- Gross margin declined by 90 basis points.
- Earnings per share (EPS) grew 4% to $0.87. That was three cents worse than what Wall Street wanted to see.
- The company spent $125 million buying back 1.4 million shares during the quarter.
Turning to guidance:
- The company now expects full-year earnings to land between $3.59 and $3.61 per share. That's slightly worse than its prior guidance range of $3.59 to $3.65 per share. It is also lower than the $3.64 in EPS that Wall Street was looking for.
- Management provided investors with an initial look at guidance for 2018, too. EPS is expected to grow 7% to 10% to a range of $3.85 to $3.96. That's also below the $4.01 that market watchers were expecting.
Traders responded to the lower-than-hoped-for profit and weak guidance by knocking down the share price.
Henry Schein's business might not be exciting, but the company sells a wide range of recession-resistant products and boasts a long history of delivering for its investors. With shares currently selling at their lowest point in all of 2017, the odds look favorable that management is about to get aggressive with its share repurchase activity.
With sales and profits still moving in the right direction, my hunch is that this stock won't be down for long. Opportunistic investors might want to use this decline as their chance to get in.