DENTSPLY (XRAY) Q3 Earnings: Is Disappointment in Store?

DENTSPLY Sirona Inc. XRAY is expected to report third-quarter 2016 results on Nov 4. Last quarter, the company reported earnings of 76 cents per share, which beat the Zacks Consensus Estimate by 6 cents.

Notably, the company’s results compared favorably with the Zacks Consensus Estimate in the last four quarters, with an average beat of 5.71%.

Let's see how things are shaping up for this quarter.

Factors at Play

We believe the DENTSPLY-Sirona combined entity will benefit from revenue and cost synergies in 2016 and beyond. Moreover, a gradual recovery in the U.S. market should benefit DENTSPLY. Also, emerging markets provide significant opportunities for the company as these areas are vastly untapped with low dental products’ penetration.

However, integration will be a risk in the near term. Moreover, unfavorable foreign exchange rate volatility will continue to hurt DENTSPLY’s results in the immediate future. Additionally, higher capital expenditure on product development, along with persistent decline in sales, is expected to keep margins under pressure.

Overall, the company’s activities during the July–September period were inadequate to win analysts’ confidence. As a result, the Zacks Consensus Estimate for the third quarter deteriorated to 63 cents from 68 cents per share over the last 90 days.

Earnings Whispers

Our proven model does not conclusively show that DENTSPLY is likely to beat on earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. That is not the case here as you will see below.

Zacks ESP: The Earnings ESP for DENTSPLY is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at 70 cents. Please check our Earnings ESP Filter that enables you to find stocks that are expected to come out with earnings surprises.

Zacks Rank: DENTSPLY carries a Zacks Rank #4, which decreases the predictive power of ESP. We caution against stocks with a Zacks Ranks #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are a few stocks worth considering that, per our model, have the right combination of elements to post an earnings beat this quarter:

Glaukos Corporation GKOS has an Earnings ESP of +100% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Bard C R Inc. BCR has an Earnings ESP of +0.37% and a Zacks Rank #2.

Invuity, Inc. IVTY has an Earnings ESP of +1.61% and a Zacks Rank #2.

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