We have noted Henry Schein's positive performance during today's afternoon trading session, during which it logged a 3.0% outperformance of the S&P 500. At its current price of $73.19, the company is now trading in range of its average target price of $72.6, which calls into question its ability to keep moving higher. Analysts have given the Medical Specialities stock target prices ranging from $55.0 to $83.0 dollars per share, with an average rating of hold.
To understand the market's outlook on the stock, we can look at Henry Schein's short interest: the proportion of the fshare float that is tied to short positions. Behind each short position is an investor who believes that the stock will decline in the future. Here, the stock's short interest is 5.7% which means the outlook is split.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
Another way to gauge the sentiment on Henry Schein is to look at the percentage of institutions that are invested in the stock. In this case, 102.3% of the shares are held by pension, mutual, and hedge funds, which shows that these institutions probably have strong confidence in the stock.
If institutions are invested in a particular stock, it shows in most cases that they have performed quality research and concluded that it is a good investment. In some cases, however, increases in institutional ownership could be a sign of a takeover attempt or proxy fight, which can actually injure share prices. Also, institutions are not infallible, and can certainly make miscalculations -- often with spectacular results.
Overall, there is mixed market sentiment on Henry Schein because its an analyst consensus of little upside potential, a hold rating, an average amount of shares sold short, and a significant number of institutional investors. Warren Buffett famously said that in the short term, markets are voting mechanisms, but in the long term, they are weighing mechanisms. This means that long term investors should be aware of a stock's fundamentals before committing.
Buffett was one of the fist investors to focus on free cash flow as a yardstick for a company's health. Here are HSIC's recent cash flows:
| Date Reported | Cash Flow from Operations ($ k) | Capital expenditures ($ k) | Free Cash Flow ($ k) | YoY Growth (%) |
|---|---|---|---|---|
| 2023 | 500,000 | 147,000 | 353,000 | -30.24 |
| 2022 | 602,000 | 96,000 | 506,000 | -19.81 |
| 2021 | 710,000 | 79,000 | 631,000 | 14.73 |
| 2020 | 599,000 | 49,000 | 550,000 | -4.82 |
| 2019 | 654,087 | 76,219 | 577,868 | -5.8 |
| 2018 | 684,706 | 71,283 | 613,423 |
