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3 Dental Stocks to Top Earnings Estimates This Season

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Of late, the global dental industry demonstrated strong and sustainable growth, courtesy of the uninterrupted rate of evolution that its niche space is witnessing to embrace the changing needs of patients. With the aging of population, the industry stands testament to a gradual change in healthcare delivery system with newer policy adoptions. Also, an increasing healthcare awareness has led to a continuous technological innovation on the dental equipment platform, enabling a rise in adoption of artificial intelligence (AI) and big-data applications.

Good news is that on the back of an upbeat consumer sentiment and increased business investments, this industry appears to be in the pink of health now. Year to date, the dental supplies market has been faring better than the S&P 500 index. The market has gained 6.7%, outperforming the broader market's 5.8% tally.

While we are currently in the middle of second-quarter 2018 earnings season with a number of releases yet to come up, we hardly expect any deviation from this uptrend.

Let us delve deeper:

Factors Driving Demand for Dental Treatment

Rise in Elderly Population: A graying populace has been a significant contributor. With age, the senior citizens are showing tendency to fall under a different dental disease pattern. Per the National Institute of Dental and Craniofacial research, more than 24% adults aged above 74 years have lost all teeth. People on medication for chronic and metabolic disorders also reach an edentulous state.

Orthodontic Requirement Among the Teen and Children: Currently, around 60-75% of the total global population is suffering malocclusion or misaligned teeth (a Cision Report). Also, a recent study published in NCBI shows that only 4% of 13-15-year-old adolescents has normal occlusion with the rest suffering various forms of malocclusion. This directly indicates how children and teenagers are slowly but steadily dominating the global orthodontic market.

Cosmetic Needs: Growing awareness of esthetic needs has also been a major growth catalyst for the dental prosthetic market. Per Markets and Markets, global cosmetic dentistry is expected to make $22,362.4 million by 2020 at a CAGR of 6.8% during 2015-2020. Moreover, an increase in disposable income gives rise to higher demand for cosmetic dental surgeries.

Other Factors: Poor lifestyle choices and an unhygienic dental care lead to a spurt in demand for dental procedures. Increased dental diseases are another factor. Also, dental injuries caused by road accidents boost demand for dental implants and prosthetics.

Dental Implant Market — A Sign of Boom: The global dental implant and prosthetic market is gradually shifting gears from conventional to a technologically-advanced sphere. Laser dentistry is much requested by dental patients because of its painless procedure for extraction of teeth, orthodontics and periodontal decay. Per Markets and Markets, the dental lasers market is expected to reach a value of $224.7 million by 2020 at a CAGR of 5.2% during the 2015-2020 period.

Zacks Methodology

Given the existence of multiple players in the Medical-Dental industry, finding the right stocks with potential to beat estimates on the back of above factors, might be quite a daunting task.

However, our proprietary Zacks methodology, makes this routine fairly simple for investors.

One can taper the teeming choices, focusing specifically on the ‘medical instruments’ and ‘medical product’ stocks (specialized chunks under the Medical-Device subcategory), flaunting the desirable combination of a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold).

Earnings ESP is our proven methodology to determine stocks with maximum chances to deliver an earnings surprise at the next result announcement. This key element provides the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.

Our research shows that for stocks with this combination, chances of a positive earnings surprise are significantly as high as 70%.

Going by this criterion, we hereby present four stocks poised to beat on earnings this reporting cycle.

Our Picks

DENTSPLY SIRONA Inc. (XRAY - Free Report) : Headquartered in York, PA, DENTSPLY SIRONA Inc. (XRAY - Free Report) is a global leader in the design, development, manufacture and marketing of dental consumables, dental laboratory products, dental specialty products and consumable medical device products.

DENTSPLY SIRONA's innovations have been consistently driving its top line. Per management, the company spends more than $150 million on R&D and thus, has a robust pipeline. Furthermore, efforts of DENTSPLY SIRONA’s laser team in accelerating major innovations deserve a mention.

The company is expected to report second-quarter 2018 performance on Aug 7.

We expect an earnings beat for this stock, which has a Zacks Rank #3 and an Earnings ESP of +1.70%.

Cardinal Health, Inc. (CAH - Free Report) : Based in Dublin, OH, Cardinal Health Inc. is a nation-wide drug distributor and a provider of services to pharmacies, healthcare providers and manufacturers.

We are upbeat about Cardinal Health’s Medical and Pharmaceutical offerings, which provide the company with a competitive edge in its niche domain. The company offers industry expertise as well as a widening suite of safe products.

Cardinal health will report fourth-quarter fiscal 2018 results on Aug 6, before the market opens.

We believe the company is set to beat the Zacks Consensus Estimate as it has a Zacks Rank #3 and an Earnings ESP of +1.40%.

Endologix, Inc. (ELGX - Free Report) : The company develops and markets medical devices for the treatment of abdominal aortic aneurysms in the United States and internationally.

Endologix will report the second quarter of 2018 financial figures on Aug 9 after market close.  

We believe Endologix is poised to trump the Zacks Consensus Estimate as it has the perfect combination of a Zacks Rank of 3 and an Earnings ESP of +3.23%.

Meanwhile, you can see the complete list of today’s Zacks #1 Rank stocks here.

Endologix, Inc. Price and EPS Surprise

Endologix, Inc. Price and EPS Surprise | Endologix, Inc. Quote

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