Sirona Dental Systems
) reached a 52-week high of $57.36 on Friday, September 28, 2012.
The closing price of this dental equipment stock as of September
28, 2012 was $56.96, which represented a solid year-to-date return
Several factors such as solid constant currency growth, a raised
fiscal 2012 outlook, portfolio expansion, improvement of
distribution network and diversified revenues and geographic base
are driving the stock.
On August 3, 2012, Sirona reported third quarter fiscal 2012
results with earnings of 80 cents per share beating the Zacks
Consensus Estimate of 78 cents per share. The company witnessed 7%
year over year revenue growth (in constant currency terms) to gross
of $242 million during the quarter. Growth was led by higher sales
of CAD/CAM systems, imaging systems as well as increased revenues
from treatment centers.
While Germany significantly contributed to revenues, the rest of
the European market remained stable. Non-European markets continued
to fuel growth, with robust double-digit growth in Asia-Pacific.
The company continues to invest in sales and service infrastructure
in high value markets such as Japan and China. Management envisages
robust growth in the Chinese market in the near-term.
Based on its momentum in the non-European, non-American markets,
management raised its fiscal 2012 expected constant currency
revenue growth to a range of 8% to 10% compared with the prior
guidance in the range of 6% to 8%.
Sirona expanded its exclusive distribution agreement with
) in the quarter. The company is also well placed in the
international market with
) being its principally largest distributor and core partner in
Management asserts that the expansion of its exclusive
distribution agreement with Patterson will improve the company's
marketing management by strengthening its go-to-market strategy.
The main focus of this agreement is to expand its presence in the
U.S. market and thereby increase revenues.
Sirona is progressively expanding its product portfolio, backed
by innovation. The company is adequately placed to gain from its
first-mover advantage in certain niches. Improvement in the
penetration rates for its innovative offerings could be just the
catalyst which the company needs to drive growth in the short- as
well as long-term.
Earnings Estimate Revision
The Zacks Consensus Estimate for fiscal 2012 increased
approximately 1% to $3.06 per share over the last 60 days. The
current estimate implies year-over-year growth of 6.14%.
For fiscal 2013, the Zacks Consensus Estimate rose by 0.3% over
the same time frame to $3.39 per share, implying year-over-year
growth of 11.01%.
Sirona looks attractive compared to its peers. The company
currently trades at a forward P/E of 18.63x, a 6.9% discount to the
peer group average of 20.01x. The price-to-book ratio of 3.31x
represents a 2.5% premium to the peer group average of 3.23x.
Sirona has a trailing 12-month ROE of 17.4% compared with the
peer group average of 15.1%
About the Company
Spun off from the Siemens Medical Technology Division of
) in 1997, Sirona has emerged as a leading innovator and
manufacturer of dentistry products. Headquartered in Long Island
City, New York, the company operates in more than 135 nations
Sirona currently retains a Zacks #3 Rank, which translates into
a short-term Hold rating.
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