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Why Is Dentsply (XRAY) Up 6.2% Since Last Earnings Report?

·5-min read

A month has gone by since the last earnings report for Dentsply International (XRAY). Shares have added about 6.2% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Dentsply due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

DENTSPLY SIRONA Reports Weak Q1 Preliminary Results

DENTSPLY SIRONA Inc. reported preliminary first-quarter 2022 adjusted earnings per share of 52 cents. The Zacks Consensus Estimate for earnings is pegged at 50 cents. Going by this preliminary announcement, the bottom line declined 27.5% from the prior-year quarter.

Per the same announcement, GAAP EPS in the quarter was 30 cents, down 43.8% from the year-ago quarter.

Revenues

Per the preliminary results, revenues in the quarter under review amounted to $965 billion, down 6.1% from the year-ago quarter. The consensus mark for revenues is pegged at $965.5 million.

Business Details

Following are the preliminary segment results for the quarter under review:

Consumables

Consumable revenues fell 7.1% year over year and 2.7% on an organic basis in the first quarter to $400 million. Per management, the fall in organic sales was due to lower sales in the United States, the impact of COVID-19 variants on sales volumes in some markets, supply chain challenges and a tough comparison in the prior-year quarter on account of the COVID-19 rebound. However, increased pricing and demand for Endodontic Consumables partially offset the downside.

Technologies & Equipment

Technologies & Equipment revenues were down 5.4% year over year to $565 million in the reported quarter. On an organic basis, net sales fell 0.5%. Supply chain constraints and lower sales in the United States were responsible for the decline in organic sales. However, sustained growth in dentist-directed clear aligners and Implants partially offset the downside.

Revenues by Geography

Per the preliminary announcement, in the United States, revenues fell 13.7% to $299 million. Rest of World revenues decreased 4.6% year over year to $250 million. European revenues declined 0.6% year over year to $416 million.

Margin Analysis

Per the preliminary results, gross profit in the reported quarter amounted to $515 million, down 11.1% on a year-over-year basis. Gross margin was 53.4%, contracting 300 basis points (bps).

Selling, general and administrative expenses were $374 million, down 2.1% from the year-ago quarter. Research and development expenses amounted to $45 million, up 12.5% from the prior-year quarter.

Operating profit was $93 million, down 39.6% from the year-ago quarter. Operating margin was 9.6%, contracting 530 bps on a year-over-year basis.

Financial Condition

Per the preliminary announcement, DENTSPLY SIRONA exited the first quarter of 2022 with cash and cash equivalents of $374 million, up from $339 million sequentially.

According to the same announcement, net cash provided by operating activities at the end of the first quarter was $93 million compared with $49 million in the year-ago period.

2022 Guidance Revised

Per the preliminary announcement, the company projects 2022 revenues within $4.1-$4.2 billion. The Zacks Consensus Estimate for the same is pegged at $4.23 billion. The outlook includes organic sales growth of 2-3%.

The company expects an adjusted EPS of $2.35-$2.55. The Zacks Consensus Estimate for the same stands at $2.60.

Adjusted operating margin is projected to exceed 17% in 2022.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -15.24% due to these changes.

VGM Scores

At this time, Dentsply has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Dentsply has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Dentsply belongs to the Zacks Medical - Dental Supplies industry. Another stock from the same industry, Becton Dickinson (BDX), has gained 2.4% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Becton Dickinson reported revenues of $5.01 billion in the last reported quarter, representing a year-over-year change of +2.1%. EPS of $3.18 for the same period compares with $3.19 a year ago.

Becton Dickinson is expected to post earnings of $2.52 per share for the current quarter, representing a year-over-year change of -8%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.2%.

Becton Dickinson has a Zacks Rank #4 (Sell) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.


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