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Here's Why You Should Dump DENTSPLY (XRAY) Stock Right Now
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Things have been very rough for DENTSPLY SIRONA Inc. (XRAY - Free Report) of late, evident from a dismal guidance. The company is currently an underperformer in the competitive MedTech space. If you are still holding on to shares of this company, it is time you dump them, as chances of favorable returns in the near term are dim.
Offloading certain underperformers at the right time helps maximize portfolio returns. This might be the case here as DENTSPLY’s price movement has been unfavorable in the past year. The company’s shares have lost 28.1% against the industry’s rise of 11.2%. The current level is also lower than the S&P 500 index’s return of 15.6%.
How Are Bottom Line Estimates Faring?
In the last 60 days, the Zacks Consensus Estimate for DENTSPLY’s 2018 earnings per share (EPS) plunged 15.4% to $2.19. For the current quarter, the same for earnings is pegged at 51 cents. This has declined more than 28% over the same time frame.
The stock witnesses negative analyst sentiments, which is reflected by its Zacks Rank #5 (Strong Sell). This indicates possibilities of underperformance in the near term.
3 Factors Plaguing DENTSPLY
Moody's Not Happy With DENTSPLY
On Aug 10, Moody's Investors Service, the rating services arm of Moody’s Corporation, downgraded DENTSPLY's senior unsecured notes to Baa2. The rating outlook has been revised to negative from stable due to lower sales and fixed cost absorption of the company.
The lackluster rating reflects the negative trends in the Technology & Equipment business as well. The company has witnessed adverse impacts in its distribution strategies in the past year.
Consequently, Moody's expects an approximately 400 basis point contraction in operating margins during 2018. Not to forget, DENTSPLY has been already planning to reduce operating costs and improve distributor relationships. In spite of these factors, Moody’s believes that these initiatives will consume time and carry risks. Per Moody’s, a failure in successful execution of the strategies will put pressure on operating margins.
Impairment Charges Impacting Q2
In the second quarter of 2018, DENTSPLY incurred a goodwill and intangible impairment charge of $1.27 billion, which dented overall results.
Per management, the goodwill and intangible impairment charges inthe Technologies and Equipment unit totaled $1.2 billion. This was driven by lower projected revenues and operating margin rates for DENTSPLY’s CAD/CAM and Imaging units.
The Consumable segment had $69 million of impairment, reflecting lower-than-anticipated growth for DENTSPLY’s legacy orthodontic business.
DENTSPLY expects adjusted EPS for 2018 in the range of $2-$2.15, down from the earlier range of $2.55-$2.65. The Zacks Consensus Estimate is pegged at $2.57, above the projected range. It reflects increased margin pressure through the rest of 2018.
Revenues for 2018 are expected to decline 2% at constant currency (cc)in 2018, down from the previous expectation of 2% growth at cc.
Inogen has a long-term expected earnings growth rate of 22.5%, while the same for Integer Holdings and The Cooper Companies is at 15% and 10.8%, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Image: Bigstock
Here's Why You Should Dump DENTSPLY (XRAY) Stock Right Now
Things have been very rough for DENTSPLY SIRONA Inc. (XRAY - Free Report) of late, evident from a dismal guidance. The company is currently an underperformer in the competitive MedTech space. If you are still holding on to shares of this company, it is time you dump them, as chances of favorable returns in the near term are dim.
Offloading certain underperformers at the right time helps maximize portfolio returns. This might be the case here as DENTSPLY’s price movement has been unfavorable in the past year. The company’s shares have lost 28.1% against the industry’s rise of 11.2%. The current level is also lower than the S&P 500 index’s return of 15.6%.
How Are Bottom Line Estimates Faring?
In the last 60 days, the Zacks Consensus Estimate for DENTSPLY’s 2018 earnings per share (EPS) plunged 15.4% to $2.19. For the current quarter, the same for earnings is pegged at 51 cents. This has declined more than 28% over the same time frame.
The stock witnesses negative analyst sentiments, which is reflected by its Zacks Rank #5 (Strong Sell). This indicates possibilities of underperformance in the near term.
3 Factors Plaguing DENTSPLY
Moody's Not Happy With DENTSPLY
On Aug 10, Moody's Investors Service, the rating services arm of Moody’s Corporation, downgraded DENTSPLY's senior unsecured notes to Baa2. The rating outlook has been revised to negative from stable due to lower sales and fixed cost absorption of the company.
The lackluster rating reflects the negative trends in the Technology & Equipment business as well. The company has witnessed adverse impacts in its distribution strategies in the past year.
Consequently, Moody's expects an approximately 400 basis point contraction in operating margins during 2018. Not to forget, DENTSPLY has been already planning to reduce operating costs and improve distributor relationships. In spite of these factors, Moody’s believes that these initiatives will consume time and carry risks. Per Moody’s, a failure in successful execution of the strategies will put pressure on operating margins.
Impairment Charges Impacting Q2
In the second quarter of 2018, DENTSPLY incurred a goodwill and intangible impairment charge of $1.27 billion, which dented overall results.
Per management, the goodwill and intangible impairment charges inthe Technologies and Equipment unit totaled $1.2 billion. This was driven by lower projected revenues and operating margin rates for DENTSPLY’s CAD/CAM and Imaging units.
The Consumable segment had $69 million of impairment, reflecting lower-than-anticipated growth for DENTSPLY’s legacy orthodontic business.
DENTSPLY SIRONA Inc. Price and Consensus
DENTSPLY SIRONA Inc. Price and Consensus | DENTSPLY SIRONA Inc. Quote
Guidance Lowered
DENTSPLY expects adjusted EPS for 2018 in the range of $2-$2.15, down from the earlier range of $2.55-$2.65. The Zacks Consensus Estimate is pegged at $2.57, above the projected range. It reflects increased margin pressure through the rest of 2018.
Revenues for 2018 are expected to decline 2% at constant currency (cc)in 2018, down from the previous expectation of 2% growth at cc.
Key Picks
A few better-ranked stocks in the MedTech space are InogenInc (INGN - Free Report) , Integer Holdings Corporation (ITGR - Free Report) and The Cooper Companies (COO - Free Report) . Inogen has a Zacks Rank #2 (Buy). Integer and Cooper Companies sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen has a long-term expected earnings growth rate of 22.5%, while the same for Integer Holdings and The Cooper Companies is at 15% and 10.8%, respectively.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
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