This article is aimed to offer a performance analysis of three between the biggest companies of the dental sector: Colgate-Palmolive, Dentsply Sirona and Henry Schein.
Colgate-Palmolive Company (Colgate) is a consumer products company. The Company operates in two product segments: Oral, Personal and Home Care, and Pet Nutrition. The Oral, Personal and Home Care product segment is operated through five geographic segments, which include North America, Latin America, Europe, Asia Pacific and Africa/Eurasia. The Company’s oral care products include Colgate Total, Colgate Sensitive Pro-Relief, Colgate Max Fresh and Colgate Optic White. The Company is also engaged in various product categories of the personal care market with operations in liquid hand soap, which it sells under the Palmolive, Protex and Softsoap brands. The Company manufactures and markets a range of products for the home care market, including Palmolive and Ajax dishwashing liquids, Fabuloso and Ajax household cleaners and Murphy’s Oil Soap. The Company, through its Hill’s Pet Nutrition segment (Hill’s), manufactures pet nutrition products for dogs and cats.
Henry Schein, Inc. is a provider of healthcare products and services primarily to office-based dental and medical practitioners. The Company operates through two segments: healthcare distribution, and technology and value-added services. The healthcare distribution segment distributes consumable products, small equipment, laboratory products, large equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products and vitamins. The technology and value-added services segment provides software, technology and other value-added services to healthcare practitioners. Its technology group offerings include practice management software systems for dental and medical practitioners. The Company provides its services to dental practitioners and laboratories, and physician practices, as well as government and institutional healthcare clinics.
DENTSPLY SIRONA Inc. is a manufacturer of professional dental products and technologies. The Company develops, manufactures, and markets solutions offering, including dental and oral health products, as well as other consumable medical devices. It operates through two segments: Dental and Healthcare Consumables, and Technologies. The dental industry encompasses the diagnosis, treatment and prevention of disease and ailments of the teeth, gums and supporting bone. Its principal dental product categories are dental consumable products, dental laboratory products, dental specialty products and dental equipment. Additionally, its consumable medical device products are used for urological and surgical applications. These products are produced by the Company in the United States and internationally and are distributed throughout the world under various brand names, including ANKYLOS, AQUASIL ULTRA, ARTICADENT, ATLANTIS, CALIBRA, CAULK, CAVITRON, CELTRA, DELTON, DENTSPLY, DETREY and DYRACT.
As all the three dental companies under exam belongs to the Standard and Poor’s 500 index the aim of our analysis is to determine whether Colgate-Palmolive, Henry Schein and Dentsply Sirona underperform or outperform the market during the recent year period ending 27th March 2020.
An historical price analysis is provided through individual
charts that compare respectively the S&P 500 index to each of the three companies under study.
The S&P500 index or Standard & Poor’s 500 Index is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies. It is frequently used to gauge market performance because of its composition which reflects the full breadth of markets.
The S&P500 saw constant growth over the rolling 12 months period, reaching + 20% in the period considered between 27th March 2019 and 15th February 2020. The main factors that contributed to this growth leading to this big and constant growth have been mainly associated to optimism about the U.S. and Global markets and economy and in particular to U.S. taxation regime that allowed companies to reinvest part of their profits in buybacks, resulting in a surge of their respective stock prices. The growth has been suddenly disrupted by the COVID-19 pandemic outbreak in China by late December 2019, which had spread to Europe and U.S. with great magnitude by mid February, resulting in a fall of the S&P 500 index of 33.9% from its record high on 19th February 2020 to its 1 year low on 23rd March 2020. The index has then bounced up + 13.6% in the past week, from 24th March 2020 to 27th March 2020 stabilizing at -10% result on the 1 year performance, optimist for the allocation of an emergency aid bill of almost $ 2,2 T from the FED, approved by the House of Representatives on Friday 27th March.
The company outperformed the market with respect to the S&P 500 index during the first 5 months from 27th March 2019 until September 2019 when it slowed and adjusted to the market before starting a recession curve until the beginning of November resulting in a 12,6% loss from 4th September 2019 to 4th November 2019. The security value then raised with more correspondence to the S&P 500 index but showing higher volatility until February 2020. Concerning the security behavior in correspondence to the recession curve driven by the COVID-19 outbreak, Colgate-Palmolive showed a lower volatility compared to the market thus in line with its 5Y Monthly beta value of 0.71 (Yahoo Finance). On 27th March 2020 Colgate-Palmolive closed at $ 65.26 per share, resulting up + 2.26% from the previous day and approximative – 3% on the year period, compared to S&P 500 index which closed at $ 2,541.47, resulting in a change respectively of -3.37% from the previous day and an approximative – 10% result on the year period.
Financial data on 27th March 2020:
|Market Cap||55.957 B ($)|
|Forward Divident & Yield||1.76 (2.76%)|
|1 Y Target Est||74.24|
Henry Schein analysis
The company outperformed the market during the 2nd quarter of 2019 resulting in a price change up to 20% from 27th April 2019 to mid June 2019. Afterwards Henry Schein share price began to adjust to the market contrary to the growth of the S&P 500 index until the beginning of September 2019 for then growing in line with the market performance reaching a +25.17 % change on the year by 19th February 2020. The COVID-19 outbreak resulted in a loss of 41% from its historical high of the recent year on 19th February to its historical low of the recent year on 23rd March 2020. Subsequently the market bounce, Henry Schein share price recorded a +15.8% change closing on 27th March at $ 50.00 resulting in a 15% loss slightly underperforming the market (-10%) on annual basis but presenting a 5 Y Monthly beta value of 0.86 compared to the market.
Financial data on 27th March 2020:
|Market Cap||7.17 B ($)|
|Forward Dividend & Yield||N/A (N/A)|
|1 Y Target Est||69.29|
Dentsply Sirona analysis
The company performed in line with the market during the year period considered between 27th March 2019 and 27 March 2020, with exception for the period included between May and July 2019 when it outperformed the market showing better results and reaching $ 58.32 price per share on 1st July 2019, reflecting a +18% change from 27th March. Afterwards the company underwent a short recession period, contrary to the market direction, returning in line with the S&P 500 by the end of July 2019. During the 3rd and 4th quarter of 2019 the company performed in line with the market or slightly outperforming until the beginning of February 2020. The COVID-19 outbreak resulted in a loss of 45.55% from the 19th February to its historical low of the recent year on 23rd March 2020. Subsequently the market bounce, Dentsply Sirona share price recorded a +18.9% change closing on 27th March at $ 37.93 resulting in a 23% loss underperforming the market (-10%) on annual basis. Dentsply Sirona showed an higher volatility during the market recession but remained almost in line with the market performance during the year period thus also corresponding to its 5 Y Monthly beta value of 0.96.
Financial data on 27th March 2020:
|Market Cap||8.4 B ($)|
|Forward Dividend & Yield||0.40 (1.02%)|
|1 Y Target Est||56.25|
DARK BLUE: Colgate-Palmolive
LIGHT BLUE: Dentsply Sirona
GREEN: Henry Schein
When comparing the three equities, we find increased volatility for both Dentsply Sirona and Henry Schein. Dentsply Sirona and Henry Schein also outperformed boththe market (S&P 500 index) and Colgate-Palmolive. The high volatility is also reflected on a higher magnitude of loss under stress, particularly over the final period under review; the COVID-19 outbreak. This is visible over the 1 year change resulting respectively -3% for Colgate-Palmolive, -15% for Henry Schein and -23% for Dentsply Sirona. A possible factor that contributed to theses changes diversification of products. Colgate-Palmolive is a more diversified company, offering consumer products of different segments to a large population.
On the other hand, both Henry Schein and Dentsply Sirona belong to more niche markets resulting in a higher concentration of competition. Dentsply Sirona is mainly focused on the dentistry segment, while Henry Schein focuses on marketing products in other healthcare segments. With Dentsply Sirona operating in a niche market, the stock tends to be subject to higher volatility and lower returns. This has only been exasperated with the recent events of the COVID-19 crisis.
This article hasn’t been written with the goal to encourage or discourage any specific investment in U.S. securities.
Written by Dr Jacopo Felisi, European Dental Society, Board Director
Reviewed by Gabriella Mazziotti, Wells Fargo (U.S.) , Financial Advisor