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Dentsply (XRAY) Soars to 52-Week High, Time to Cash Out?

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Shares of DENTSPLY SIRONA (XRAY) have been strong performers lately, with the stock up 4.7% over the past month. The stock hit a new 52-week high of $60.27 in the previous session. DENTSPLY SIRONA has gained 6.3% since the start of the year compared to the 2.7% move for the Zacks Medical sector and the 6% return for the Zacks Medical - Dental Supplies industry.

What's Driving the Outperformance?

The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on November 7, 2019, Dentsply reported EPS of $0.57 versus consensus estimate of $0.5.

For the current fiscal year, Dentsply is expected to post earnings of $2.71 per share on $3.99 billion in revenues. Meanwhile, for the next fiscal year, the company is expected to earn $2.98 per share on $4.11 billion in revenues. This represents a year-over-year change of 10.36% and 2.95%, respectively.

Valuation Metrics

Dentsply may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.

On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.

Dentsply has a Value Score of C. The stock's Growth and Momentum Scores are B and B, respectively, giving the company a VGM Score of B.

In terms of its value breakdown, the stock currently trades at 22.2X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 7.1X versus its peer group's average of 12.6X. Additionally, the stock has a PEG ratio of 1.88. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.

Zacks Rank

We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Dentsply currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.

Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Dentsply meets the list of requirements. Thus, it seems as though Dentsply shares could have potential in the weeks and months to come.

How Does Dentsply Stack Up to the Competition?

Shares of Dentsply have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Patterson Companies (PDCO - Free Report) , McKesson (MCK), and DexCom (DXCM), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.

The Zacks Industry Rank is in the top 45% of all the industries we have in our universe, so it looks like there are some nice tailwinds for Dentsply, even beyond its own solid fundamental situation.

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