On Sep 10, we retained
DENTSPLY International Inc.
) at Neutral, following its second quarter of 2013 results.
Although the mixed second-quarter results were not impressive, we
are confident that the company's strong business fundamentals
should boost overall growth, going forward.
Why the Retention?
On Aug 1, DENTSPLY's 2013-second-quarter adjusted earnings per
share rose 6.5% to 66 cents, which beat the Zacks Consensus
Estimate of 65 cents by 1.54%. However, revenues were roughly
flat at $761.0 million, missing the Zacks Consensus Estimate by a
whopping $25 million. Although revenues are improving steadily in
the U.S., disappointing sales in Europe dampened its growth in
the reported quarter.
DENTSPLY's earnings have managed to beat the Zacks Consensus
Estimate in three out of the last four quarters, missing the mark
in the first quarter of 2013, with an average negative surprise
of 0.45%. However, following the earnings release, the Zacks
Consensus Estimates for 2013 and 2014 remain unchanged at $2.35
and $2.58, respectively. As a result, the stock has a Zacks Rank
XRAY's diversified product range and significant investments in
product innovation should eventually help it to expand its share
in the dental market. Its debt level continues to decrease and
XRAY plans to invest in accretive acquisitions as well as
leverage investor returns in the near-term.
On a positive note, the Astra Tech integration is progressing in
the right direction and is helping the company to save costs,
which in turn is boosting operating margins. Additionally, the
company has gained back significant market share in the
orthodontic space, but henceforth, it might be difficult to
capture further share.
However, the weak dental market condition offers only modest
growth prospects. Austerity measures in southern Europe due to
geopolitical uncertainty and fluctuations in currency movement
led management to lower its full-year 2013 guidance. We remain on
the sidelines until we see clear signs of top line growth.
Other Stocks to Consider
Medical stocks that warrant a look are
The Cooper Companies Inc.
MWI Veterinary Supply
). All these stocks carry a Zacks Rank #2 (Buy).
ALIGN TECH INC (ALGN): Free Stock Analysis
COOPER COS (COO): Free Stock Analysis Report
MWI VET SUPPLY (MWIV): Free Stock Analysis
DENTSPLY INTL (XRAY): Free Stock Analysis
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