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Gauging Dentsply Sirona’s Valuation Trend and Recent Acquisitions

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Aug. 9 2018, Updated 7:53 a.m. ET

Outlook for 2018

Dentsply Sirona (XRAY) has lowered its guidance for fiscal 2018. It now expects adjusted EPS of $2–$2.15 compared to the previous estimate of $2.55–$2.65. The decrease represents Dentsply’s expectation of a decline in revenue for the remainder of 2018, driven by higher levels of inventory destocking at its dealer partners.

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Acquisition of OraMetrix

In May, Dentsply Sirona acquired OraMetrix for $120 million with an additional payment of up to $30 million, subject to earn-out provisions. OraMetrix specializes in orthodontic treatment planning software, wire bending, and clear aligner manufacturing.

During the second quarter, Dentsply Sirona also acquired Recherches Techniques Dentaires, a French endodontic post manufacturer, for $132 million.

Valuation metrics

Since the start of 2018, Dentsply Sirona stock has been trending lower. From a high of $68.47 on January 8, it fell to $41.64 on June 5. It recovered after that to $41.88 on July 31. On August 7, the stock fell ~20% to a new low of $38.84.

The enterprise value of Dentsply Sirona now stands at $12.37 billion, and its enterprise-value-to-revenue ratio is 3.06x. The stock is trading at a forward price-to-earnings multiple of 15.58x. Its price-to-sales ratio is 2.25x.

Dentsply’s long-term debt-to-equity ratio stands at 0.25x. Its current ratio, a metric of how effectively a company can meet its short-term obligations, stands at 2.20x. In comparison, the current ratios of peers Align Technology (ALGN), Medtronic (MDT), and Stryker (SYK) are 2.20x, 2.30x, and 1.80x, respectively.

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