Diving Into Dentsply Sirona Stock

Blessed are they who maintain energetic conversations with the helplessly mute, for they shall be known as dentists.”― Ann Landers.

In the present day, we put Dentsply Sirona Inc. (NASDAQ:XRAY) within the highlight. The inventory has moved up practically 25% inside the nine-week rally within the total market that closed out 2023. The corporate additionally lately added $1 billion to its inventory buyback authorization program. Can the great occasions proceed for buyers in 2024? An evaluation follows under.

Firm Overview

This dental provide firm operates from two main enterprise segments: Applied sciences & Gear, and Consumables. The previous gives dental gear, akin to therapy facilities, imaging gear, motorized dental handpieces, and different devices for dental practitioners. Consumables include endodontic merchandise comprising drills, filers, sealers, irrigation needles, and different instruments or single-use options. The corporate is positioned in Charlotte, NC. The inventory at the moment trades close to $36.00 a share and sports activities an approximate market capitalization of $7.5 billion.

Third Quarter Outcomes

The corporate posted its Q3 numbers on November 2nd. Dentsply Sirona delivered non-GAAP earnings of 49 cents a share, a penny above expectations. Nevertheless, revenues have been flat in comparison with the identical interval a 12 months in the past at $947 million, some $28 million under the consensus. As well as, on a GAAP foundation, the corporate misplaced $266 million for the quarter. This was resulting from a $302 million non-cash cost for the impairment of goodwill and different intangible belongings. Under are how outcomes broke down by division and area in the course of the quarter.

Administration revised down its projection of roughly three % income development in FY2023 to only one %. It additionally dropped its FY2023 EPS projections to $1.80 to $1.85 a share from $1.92 to $2.02 a share beforehand. Right here is how management sees different key metrics coming in for FY2023.

Analyst Commentary & Steadiness Sheet

The analyst group is at the moment combined about Dentsply Sirona prospects. Since third quarter outcomes have been posted, seven analyst companies together with Needham and William Blair have reissued/assigned Purchase/Outperform rankings on the inventory. Worth targets proffered vary from $30 to $41 a share. Six analyst companies together with Goldman Sachs and Stifel Nicolaus have reissued Maintain/Impartial rankings in opposition to the shares with worth targets starting from $30 to $32 a share. Needham had a latest pessimistic and granular name on the trade that’s price studying.

Roughly six % of the excellent float within the shares is at the moment held quick. Three insiders, together with the corporate’s CEO and CFO, bought simply over $900,000 price of shares collectively within the again half of November. That was the one insider exercise within the inventory within the final two quarters of 2023.

Dentsply Sirona ended the third quarter with practically $310 million price of money and marketable securities on its steadiness sheet. By way of the primary 9 months of the 12 months, the corporate has returned $236 million to shareholders within the type of dividends and inventory buybacks. It paid out $29 million price of dividends within the third quarter. Working money circulate improved to $134 million within the third quarter, up from $109 million in the identical interval a 12 months in the past. Administration guided it deliberate to repurchase $150 million price of inventory in its fiscal fourth quarter. Dentsply Sirona listed simply over $1.8 billion in long-term debt on its third quarter 10-Q.

Verdict

Dentsply Sirona made $2.09 a share in FY2022 on $3.92 billion in gross sales. The present analyst agency consensus has earnings falling to $1.82 on flat income development in FY2023. They challenge income to rebound to $2.05 a share on two % gross sales development in FY2024.

Initially, given the corporate’s long-term debt and the present valuations of the inventory, I imagine shareholders can be higher served on a long term foundation if administration directed extra of its money circulate to lowering debt moderately than inventory buybacks. Dentsply Sirona had $18 million in internet curiosity expense within the third quarter, an quantity that may rise as debt rolls over. The corporate projected curiosity expense of $90 million for FY2023.

Second, Dentsply Sirona Inc. inventory feels no less than totally valued right here given flat income development, a valuation of roughly 20 occasions this fiscal 12 months’s earnings, and with a dividend yield of slightly below 1.6%. Due to this fact, the advice is to keep away from the shares at these ranges.

Each tooth in a person’s head is extra helpful than a diamond.” – Miguel de Cervantes.