Henry Schein, Inc. HSIC has been gaining investors’ confidence on consistently strong results. Over the past three months, the company’s share price has outperformed its industry. The stock has gained 15.1% compared with the industry’s 4.5% rise and the S&P 500’s 5.9% gain.

This leading distributor of health care products and services across the globe has a market cap of $13.28 billion. The company’s projected earnings growth rate for the current year is 14.4% compared with the industry’s 10.1% rise.

With solid prospects, this Zacks Rank #2 (Buy) stock is an attractive pick for investors at the moment.

The company’s earnings estimate revision trend for the current year has been positive. The earnings estimates have risen 0.5% to $4.12 over the past 60 days. Further, the Zacks Consensus Estimate for current-year revenues of $13.39 billion reflects an improvement of 7.5% year over year.

Per our Zacks Style Score  system, Henry Schein has a Growth Score of A, which reflects its solid prospects. Our research shows that stocks with a Growth Style Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.

Let’s find out whether the recent positive trend is a sustainable one.

Dental Implants Business Gains From Buyouts

Henry Schein recently made three acquisitions under its dental implant business. The first buyout was of U.S.-based Intra-Lock — a provider of dental restoration solutions, including proprietary surface, connection plus biomaterial and small diameter implant technologies. The company is known for its OSSEAN surface structure, used to increase host-to-implant biocompatibility and biomechanical response. (Read More: Henry Schein’s 3 Investments to Fortify Dental Implant Arm)

The next move by Henry Schein was the integration of a majority interest in Medentis Medical — a dental implant manufacturer based in Germany. The company sells products in more than 40 countries. This will help Henry Schein expand into the inexpensive segment of the dental implant market.

The final one was the consolidation of a bulk stake in Pro-Cam Implants B.V. This company is CAMLOG’s exclusive distributor in the Netherlands.  In the days ahead, Pro-Cam Implants will represent the BioHorizons implant lines and biomaterial portfolio. Per Henry Schein, this acquisition will fortify the company’s geographic footprint in Europe.

Intra-Lock, Medentis Medical and Pro-Cam Implants are together expected to complement Henry Schein’s existing implant-based tooth replacement solutions line. This should also strengthen the company’s international presence in the dental implant space.

Strategic Animal Health Spin Off

Henry Schein’s decision to spin off the major global Animal Health business was quite a shocker for investors. The business currently accounts for nearly 30% of the company’s top line. In the second quarter, the business saw a 10.6% rise in revenues to $985.9 million. Undoubtedly, the spin-off is expected to bring major changes to Henry Schein’s overall operating results.

We believe this initiative is under Henry Schein’s 2018-2020 Strategic Plans, which focus more on dental and medical businesses.

Widespread Network and Channel Mix

Henry Schein’s distribution business boasts a wide global footprint with 61 distribution centers.  In 2017, Henry Schein acquired Merritt Veterinary Supplies. Further, the company entered into a distribution agreement with Dentsply Sirona to distribute its full line of dental equipment, including the CEREC CAD/CAM restoration system and the Schick line of imaging sensors, in the United States.

 Apart from North America and Europe, the company has presence in Australia and New Zealand as well as in emerging nations like China, Brazil, Israel, Czech Republic and Poland.

We believe Henry Schein’s worldwide reach lends it a competitive edge over other players in the healthcare distribution industry.

Other Key Picks

Other top-ranked stocks in the broader medical space are Intuitive Surgical ISRG, Amedisys, Inc. AMED and Masimo Corporation MASI.

Intuitive Surgical’s long-term expected earnings growth rate is 14.7%. The stock currently carries a Zacks Rank of 2.

Amedisys’ long-term expected earnings growth rate is 19.4%. The stock holds a Zacks Rank #1 at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Masimo’s long-term expected earnings growth rate is 14.8%. The stock has a Zacks Rank #2 at present.

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