DCF Studio

    HSIC · NMS · Healthcare

    Henry Schein, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 62.05

    Market price

    USD 84.84

    Implied upside

    -26.9%

    5-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case

    Value Per Share

    Perpetuity growth
    USD 62.05-26.9%
    Exit multiple
    USD 79.22-6.6%
    Market price
    USD 84.84

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0m415m829mFY26FY27FY28FY29FY30
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30CAGR
    RevenueUSD 13.4bnUSD 13.6bnUSD 13.7bnUSD 13.9bnUSD 14.1bn+1.4%
    EBITUSD 805.2mUSD 816.4mUSD 827.8mUSD 839.4mUSD 851.1m+1.4%
    NOPATUSD 636.1mUSD 645.0mUSD 654.0mUSD 663.1mUSD 672.3m+1.4%
    Add depreciation & amortisationUSD 253.3mUSD 256.8mUSD 260.4mUSD 264.1mUSD 267.7m+1.4%
    Less capital expenditureUSD -182.2mUSD -184.7mUSD -187.3mUSD -189.9mUSD -192.6m+1.4%
    Less increase in working capitalUSD 77.1mUSD 78.2mUSD 79.3mUSD 80.4mUSD 81.5m-1.4%
    Free cashflow to firmUSD 784.3mUSD 795.3mUSD 806.4mUSD 817.6mUSD 829.0m+1.4%
    Discount factor0.96120.88800.82030.75790.7001-
    Present valueUSD 753.9mUSD 706.2mUSD 661.5mUSD 619.6mUSD 580.4m-6.3%
    Present Value Of The ForecastUSD 3.3bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate5.00%US 10-year Treasury (^TNX)
    Equity risk premium5.50%Market assumption
    Beta0.874Reported 0.812, pulled toward 1.0 (Blume)
    Cost of equity9.81%Risk-free + beta x equity risk premium
    Cost of debt5.00%Floored at the risk-free rate (implied cost of debt was lower)
    Market capitalisationUSD 9.5bn73.3% of capital
    Total debtUSD 3.4bn26.7% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC8.24%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 62.05

    69% of EV

    Forecast FCFF, final year
    USD 829.0m
    Capex at depreciation, working capital in reinvestment
    USD 813.4m
    Less reinvestment at g/ROIC (26.1% of NOPAT)
    USD -212.2m
    Capitalised
    USD 601.2m
    ROIC (reported)
    9.6%
    Terminal value, undiscounted
    USD 10.7bn
    Terminal value, discounted
    USD 7.5bn
    Enterprise value
    USD 10.8bn
    Less net debt
    USD 3.3bn
    Equity value
    USD 7.6bn

    Exit at 12.3x EBITDA

    Value per shareUSD 79.22

    74% of EV

    Terminal value, undiscounted
    USD 13.7bn
    Terminal value, discounted
    USD 9.6bn
    Enterprise value
    USD 12.9bn
    Less net debt
    USD 3.3bn
    Equity value
    USD 9.6bn

    Spread between methods: 24%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    6.24%93.4198.35104.54112.56123.41
    7.24%73.6676.0378.8582.2886.55
    8.24%59.7360.8262.0563.4765.14
    9.24%49.3849.7750.1850.6251.10
    10.24%41.8842.0942.3042.5142.72

    Outlined: this model. Green text: above today's price of 84.84. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputModelImpliedGap
    Revenue growth, every year1.4%5.1%+3.7pp
    EBIT margin6.0%7.9%+1.9pp
    Discount rate8.2%7.0%-1.3pp
    Download as Excel

    Live formulas, not pasted numbers - edit a driver and the workbook reprices.

    Yahoo Finance and RBA data. General information, not advice. Methodology.