Dentsply Sirona (NASDAQ:XRAY) Beats Expectations in Strong Q1, Stock Soars

May 08, 2025 at 06:24 AM EDT

XRAY Cover Image

Dental products company Dentsply Sirona (NASDAQ: XRAY) announced better-than-expected revenue in Q1 CY2025, but sales fell by 7.8% year on year to $879 million. The company’s full-year revenue guidance of $3.65 billion at the midpoint came in 2.2% above analysts’ estimates. Its non-GAAP profit of $0.43 per share was 43.3% above analysts’ consensus estimates.

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Dentsply Sirona (XRAY) Q1 CY2025 Highlights:

Revenue: $879 million vs analyst estimates of $852.2 million (7.8% year-on-year decline, 3.2% beat)
Adjusted EPS: $0.43 vs analyst estimates of $0.30 (43.3% beat)
Adjusted EBITDA: $168 million vs analyst estimates of $123.2 million (19.1% margin, 36.4% beat)
The company lifted its revenue guidance for the full year to $3.65 billion at the midpoint from $3.55 billion, a 2.8% increase
Management reiterated its full-year Adjusted EPS guidance of $1.90 at the midpoint
Operating Margin: 7.2%, up from 4.4% in the same quarter last year
Free Cash Flow was -$12 million compared to -$9 million in the same quarter last year
Constant Currency Revenue fell 4.4% year on year (-1.9% in the same quarter last year)
Market Capitalization: $2.73 billion

"In the first quarter, organic sales were roughly flat excluding the Byte sales impact, with growth in two of our three regions. Adjusted EBITDA margin expanded which primarily reflects the benefits from our transformational initiatives and internal financial discipline. We are delivering progress through customer-centric innovation, customer experience improvements, and operational efficiency, while operating in an increasingly uncertain macroeconomic environment," said Simon Campion, President and Chief Executive Officer.

Company Overview

With roots dating back to 1877 when it introduced the first dental electric drill, Dentsply Sirona (NASDAQ: XRAY) manufactures and sells professional dental equipment, technologies, and consumable products used by dentists and specialists worldwide.

Sales Growth

A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Over the last five years, Dentsply Sirona’s demand was weak and its revenue declined by 1.3% per year. This wasn’t a great result and suggests it’s a low quality business.

We at StockStory place the most emphasis on long-term growth, but within healthcare, a half-decade historical view may miss recent innovations or disruptive industry trends. Dentsply Sirona’s recent performance shows its demand remained suppressed as its revenue has declined by 2.7% annually over the last two years. Dentsply Sirona Year-On-Year Revenue Growth

Dentsply Sirona also reports sales performance excluding currency movements, which are outside the company’s control and not indicative of demand. Over the last two years, its constant currency sales averaged 1.8% year-on-year declines. Because this number aligns with its normal revenue growth, we can see that Dentsply Sirona has properly hedged its foreign currency exposure. Dentsply Sirona Constant Currency Revenue Growth

This quarter, Dentsply Sirona’s revenue fell by 7.8% year on year to $879 million but beat Wall Street’s estimates by 3.2%.

Looking ahead, sell-side analysts expect revenue to decline by 3.6% over the next 12 months, similar to its two-year rate. This projection is underwhelming and indicates its newer products and services will not catalyze better top-line performance yet.

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Operating Margin

Although Dentsply Sirona was profitable this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 5.8% over the last five years. Unprofitable healthcare companies require extra attention because they could get caught swimming naked when the tide goes out. It’s hard to trust that the business can endure a full cycle.

Looking at the trend in its profitability, Dentsply Sirona’s operating margin decreased by 30.6 percentage points over the last five years, but it rose by 3.3 percentage points on a two-year basis. Still, shareholders will want to see Dentsply Sirona become more profitable in the future.

Dentsply Sirona Trailing 12-Month Operating Margin (GAAP)

In Q1, Dentsply Sirona generated an operating profit margin of 7.2%, up 2.8 percentage points year on year. This increase was a welcome development, especially since its revenue fell, showing it was more efficient because it scaled down its expenses.

Earnings Per Share

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Sadly for Dentsply Sirona, its EPS declined by 7% annually over the last five years, more than its revenue. This tells us the company struggled because its fixed cost base made it difficult to adjust to shrinking demand.

Dentsply Sirona Trailing 12-Month EPS (Non-GAAP)

We can take a deeper look into Dentsply Sirona’s earnings to better understand the drivers of its performance. As we mentioned earlier, Dentsply Sirona’s operating margin improved this quarter but declined by 30.6 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; taxes and interest expenses can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q1, Dentsply Sirona reported EPS at $0.43, up from $0.42 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Dentsply Sirona’s full-year EPS of $1.68 to grow 12.4%.

Key Takeaways from Dentsply Sirona’s Q1 Results

We were impressed by how significantly Dentsply Sirona blew past analysts’ constant currency revenue expectations this quarter. We were also excited its EPS outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock traded up 5.9% to $14.50 immediately following the results.

Dentsply Sirona had an encouraging quarter, but one earnings result doesn’t necessarily make the stock a buy. Let’s see if this is a good investment. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.

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