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Can DENTSPLY (XRAY) Spring an Earnings Surprise in Q2?

Zacks Equity Research

DENTSPLY Sirona Inc. XRAY is expected to report second-quarter 2016 results on Aug 5. Last quarter, the company reported earnings of 69 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 5.41%.

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, the emerging markets provide significant opportunities for the company as these areas are vastly untapped with low dental products penetration.

DENTSPLY SIRONA Price and Consensus

DENTSPLY SIRONA Price and Consensus | DENTSPLY SIRONA Quote

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 put margins under pressure.

Earnings Whispers

Our proven model does not conclusively show that DENTSPLY is likely to beat 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.

Zacks Rank: DENTSPLY carries a Zacks Rank #2, which increases the predictive power of ESP; but when combined with a 0.00% ESP, it makes surprise prediction difficult.

Note that we caution against stocks with a Zacks Rank #4 and #5 (Sell-rated stocks) 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:

ANI Pharmaceuticals Inc. ANIP with an Earnings ESP of +2.63% and a Zacks Rank #1.

The Cooper Companies COO with an Earnings ESP of +0.88% and Zacks Rank #2.

Genvec GNVC with an Earnings ESP of +10.00% and Zacks Rank #2.

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DENTSPLY SIRONA (XRAY): Free Stock Analysis Report
 
COOPER COS (COO): Free Stock Analysis Report
 
ANI PHARMACEUT (ANIP): Free Stock Analysis Report
 
GENVEC INC (GNVC): Free Stock Analysis Report
 
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