DENTSPLY (XRAY) Q4 Earnings: Is Disappointment in Store?

York, PA-based DENTSPLY Sirona Inc.XRAY , a dental solutions company, is expected to report fourth-quarter 2016 results on Feb 10.

Last quarter, the company reported earnings of 66 cents per share, which beat the Zacks Consensus Estimate of 63 cents.

Meanwhile, over the last four trailing quarters, the company posted earnings beats, the average being 5.71%.

Stock Performance

A glimpse at the price performance of the stock over the past three months reveals a negative return of almost 6.14%.

This compares unfavorably with the Zacks classified Medical/Dental Supplies sub-industry's gain of around 3.8%. The stock's current return is also higher than the S&P 500's return of roughly 5.4% over the same time.

Despite the unfavorable price trend, with a long-term expected earnings growth rate of 9.67%, the stock has solid potential for further appreciation.

Estimate Revision Trend

Meanwhile, the company has seen a disappointing trend with respect to earnings estimates.

The current quarter has seen five downward estimate revisions in the past 60 days with no movement in the opposite direction. Meanwhile, for the full year, six estimates moved lower while none moved higher over the same timeframe.

This had a modest impact on the consensus estimate though, as the estimate for the current quarter fell almost 3%, while the full-year estimate inched down roughly 0.7% in the past 60 days.

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

Factors at Play

DENTSPLY's dental & healthcare consumables segment holds considerable promise. Notably, this segment provides a broad spectrum of products that include preventive, restorative, instruments, endodontic and laboratory dental products, as well as consumable medical device products.

Furthermore, DENTSPLY's dental implants, CAD/CAM systems, imaging systems, treatment centers and orthodontic products in the technology segment are likely to drive the company's sales in our view.

We are also upbeat about the gradual recovery in the U.S. market. Especially, the emerging markets provide significant opportunities for the company as these areas are vastly untapped with low dental products' penetration.

On the flip side, integration will be a risk, at least for the near term. However, DENTSPLY's merger with SIRONA is expected to generate cost savings to the tune of $125 million by the third year of the completion of the transaction.

Moreover, unfavorable foreign exchange will continue to hurt DENTSPLY's results in the immediate future. Additionally, higher capital expenditure on product development along with persistent decline in sales are expected to keep margins under pressure.

Earnings Whispers

Despite a streak of positive developments, our quantitative model doesn't conclusively point to an earnings beat 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 SIRONA is 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at 65 cents. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

DENTSPLY SIRONA Inc. Price and EPS Surprise

DENTSPLY SIRONA Inc. Price and EPS Surprise | DENTSPLY SIRONA Inc. Quote

Zacks Rank: DENTSPLY SIRONA carries a Zacks Rank #4. Please note that we caution against stocks with a Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revision.

Stocks to Consider

Here are some companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

DaVita HealthCare Partners Inc. DVA has an Earnings ESP of +4.40% and a Zacks Rank #3. Additionally, on an average, the stock represented a positive surprise of almost 3.77% in the last four trailing quarters.

The Cooper Companies COO has an Earnings ESP of +2.69% and a Zacks Rank #3. The stock represented a positive surprise of almost 6.32% in the last four trailing quarters. You can see the complete list of today's Zacks #1 Rank stocks here .

Exilixis, Inc. EXEL has an Earnings ESP of +200% and a Zacks Rank #2. The stock posted a positive earnings surprise of 107.69% in the last reported quarter.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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