Henry Schein Inc (HSIC)

Conclusion

Henry Schein distributes dental and medical products and services to office-based practitioners worldwide, and it also runs a specialty products business and a practice software segment. At 88.41 USD per share on 9 November 2026, the company has a market capitalisation of 9.77 billion USD and an enterprise value of 13.48 billion USD.

The verdict is fair. The fair value band runs from 68.22 to 102.33 USD with a midpoint of 85.27 USD, a margin of safety of -3.6% at the current price. The P/E of 23.2x stands above its ten-year median of 21.8x, while EV/EBITDA of 12.4x sits below its median of 13.3x. The DCF gives 80.80 USD per share, and the fair value from historical multiples is 89.75 USD. The reverse DCF implies 5.9% annual growth, against 5.4% revenue growth over five years and 4.2% growth in free cash flow per share.

What holds the case up is cash generation: free cash flow conversion of 1.26x over the trailing twelve months, and a share count that fell at a five-year CAGR of -3.2%. What would break it is leverage and thin margins: net debt to EBITDA of 3.40x and an operating margin of 5.7%, against a ten-year median of 6.34%. The three-year EPS CAGR of -5.8% also weighs against the case.

Financial health

Financial strength is yellow: the current ratio of 1.33 is assessed as good, while net debt to EBITDA of 3.40x, interest coverage of 4.65x and an Altman Z-score of 2.79 are assessed as neutral. The quick ratio is 0.57 and debt to equity is 1.23. The Altman Z-score of 2.79 falls in the grey zone. The model was designed for manufacturers, and Henry Schein is a distributor, so the zone is only an indication. Insolvency risk: low, about 0.7% by the estimate of the Ohlson model over one to two years. The balance sheet is serviceable, but leverage is the main constraint, and the company's debt has grown by 24.3% of its five-year revenue growth in the annual series.

Earnings quality

Earnings quality is green: free cash flow conversion, the share count trend and the Beneish reading are all assessed as good. Free cash flow conversion is 1.26x on a trailing twelve-month basis and 1.13x over five years. The accrual ratio is -2.9%, and stock-based compensation is 0.26% of revenue, leaving free cash flow after stock-based compensation at 493 million USD. The Piotroski score is 4 out of 9, assessed as neutral. The Beneish M-score of -2.53 is read as unlikely to signal manipulation. The company beat estimates in six of the last eight quarters, with an average surprise of 4.26%. Next-year estimates moved by -0.06% over 90 days, with two upward and two downward revisions in the last 30 days.

Profitability

Profitability is yellow. The gross margin of 30.6% is above its ten-year median of 29.0%. The operating margin of 5.7% sits below its median of 6.34%, and the net margin of 3.07% is below its median of 4.02%. Margin stability is 12.2%. ROIC is 8.49% against a WACC of 7.63%, a ROIC minus WACC of 0.85 points, assessed as neutral. The five-year median ROIC is 8.06%. Return on equity of 13.3% depends heavily on leverage. The DuPont split shows a net margin of 3.02%, an asset turnover of 1.18x and an equity multiplier of 3.46x, so most of the return comes from the balance sheet rather than from margins.

Growth

Growth is green, supported by consistent revenue expansion and a positive outlook. Revenue compounded at 1.4% over three years, 5.4% over five years and 2.2% over ten years. Revenue grew in 8 of the last 10 comparable years. EPS shows a different picture, with a three-year CAGR of -5.8% and a five-year CAGR of 3.1%. Free cash flow per share compounded at 8.6% over three years and 4.2% over five years. The next-year EPS growth estimate is 9.21%, assessed as good. The company's recent earnings trend is weaker than its revenue trend, so the estimate depends on a margin recovery that the trailing figures do not yet show.

Valuation

Valuation is yellow, with a verdict of fair. The P/E of 23.2x is 6.6% above its ten-year median of 21.8x. EV/EBITDA of 12.4x is 7.0% below its median of 13.3x. Price to free cash flow of 18.5x is 2.1% above its median of 18.1x, price to sales of 0.71x is 16.8% below its median of 0.85x, and price to book of 3.09x is 1.5% below its median of 3.14x. The DCF gives 80.80 USD per share at a discount rate of 9.18%, with a terminal growth rate of 2.5%, and the terminal value makes up 55.0% of that figure. The reverse DCF implies 5.9% growth, against 5.4% revenue growth and 4.2% free cash flow per share growth over five years. The dividend yield is zero. The fair value band is an order-of-magnitude estimate built on fixed assumptions, including a 5% equity risk premium and capped growth. It is not a price target.

Risks

Leverage is the main weak point. A net debt to EBITDA of 3.40x and interest coverage of 4.65x leave limited room if earnings fall, and a lower EBITDA would push the leverage ratio higher. Thin margins are the second weak point: an operating margin of 5.7% against a median of 6.34% means that small cost pressures could remove much of the ROIC spread of 0.85 points over WACC. The three-year EPS decline of -5.8% shows the earnings risk that the revenue growth has not yet offset.

Some values are not available in this analysis: the debt maturity schedule and revenue by segment. Without them, refinancing risk and the contribution of each business line cannot be assessed. The fair value band rests on fixed assumptions and should be read as an order of magnitude.