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DENTSPLY International Inc. (XRAY - Analyst Report) posted adjusted net earnings per share of 61 cents for the fourth quarter of 2013 edging past the Zacks Consensus Estimate by a penny as well as the year-ago earnings of 56 cents by 8.9%. Net adjusted earnings rose 8.1% to $87.9 million from $81.4 million in the fourth quarter of 2012. However, the fourth quarter results failed to impress investors as the stock fell 1.2% after the market closed yesterday.

For full year 2013, adjusted net earnings per share rose 5.9% to $2.35 from $2.22 a year ago and were in line with the Zacks Consensus Estimate. Adjusted net earnings rose 6.9% to $341.2 million from $319.2 million in 2012.

Net revenue in the quarter inched up 0.5% to $753.7 million but lagged the Zacks Consensus Estimate of $766 million. Excluding precious metals content, net revenue rose 1.5% to $713.7 million. The increase was attributable to constant currency growth in the U.S. and Rest of World regions, partially offset by contraction in European sales.

For the full year, net revenue increased 0.8% to $2,950.8 million and again missed the Zacks Consensus Estimate of $2,963 million. Excluding precious metals content, net revenue rose 2.1% to $2.77 billion. The increase was driven by constant currency growth in each of XRAY’s major geographic regions, including the U.S., Europe, and Rest of World.

Adjusted operating income escalated 2.1% to $122.6 million from $120.1 million in the year-ago quarter. Adjusted operating margin expanded 10 bps to 17.2% in the quarter from 17.1% a year ago.

For full year 2013, adjusted operating income rose 3.2% to $488.8 million from $473.9 million in the prior year. Adjusted operating margin expanded 10 bps to 17.6% from 17.5% in 2012.

XRAY ended the year with cash and cash equivalents of $75.0 million compared with $80.1 million at the end of 2012. Long-term debt decreased to $1,166.2 million as of Dec 31, 2013 from $1,222.0 million at the end of 2012.

Cash flow from operations rose 13.0% to $417.8 million in 2013. Capital expenditure for the same period went up 9.0% to $100.3 million in the year.

For 2014, XRAY expects adjusted-earnings per share in the band of $2.45 to $2.55, reflecting a 4% to 9% rise on a year-over-year basis. The increased earnings are expected to be driven by better global market conditions in the year. The current Zacks Consensus Estimate of $2.59 lies above the guided range.

Although the bottom line beat estimates, we remain unimpressed by XRAY’s flat top line and revenue miss in the fourth quarter and the year. This is mainly due to ongoing difficult dental market trends in Europe.  However, we note that the company performed well in the U.S. Moreover, improving margins represent a potential upside for XRAY.

Currently, XRAY has a Zacks Rank #3 (Hold). Some better-ranked medical/dental suppliers stocks that warrant a look are Align Technology (ALGN - Analyst Report), CR Bard Inc. (BCR - Analyst Report), and Cardinal Health, Inc. (CAH - Analyst Report). All of them carry a Zacks Rank #2 (Buy).

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