Dentsply Sirona (XRAY)

Dental products company Dentsply Sirona (NASDAQ:XRAY) announced better-than-expected revenue in Q4 CY2025, with sales up 6.2% year on year to $961 million. On the other hand, the company’s full-year revenue guidance of $3.55 billion at the midpoint came in 3.4% below analysts’ estimates. Its non-GAAP profit of $0.27 per share was 6% below analysts’ consensus estimates.

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.

The dental equipment and technology industry encompasses companies that manufacture orthodontic products, dental implants, imaging systems, and digital tools for dental professionals. These companies benefit from recurring revenue streams tied to consumables, ongoing maintenance, and growing demand for aesthetic and restorative dentistry. However, high R&D costs, significant capital investment requirements, and reliance on discretionary spending make them vulnerable to economic cycles. Over the next few years, tailwinds for the sector include innovation in digital workflows, such as 3D printing and AI-driven diagnostics, which enhance the efficiency and precision of dental care. However, headwinds include economic uncertainty, which could reduce patient spending on elective procedures, regulatory challenges, and potential pricing pressures from consolidated dental service organizations (DSOs).

Dentsply Sirona's competitors include Align Technology (NASDAQ:ALGN) in the clear aligner space, Envista Holdings (NYSE:NVST) for dental equipment and consumables, and Straumann Holding (SWX:STMN) in the dental implant market. The company also competes with 3M (NYSE:MMM) and Henry Schein's (NASDAQ:HSIC) private label products in various dental categories.

Larger companies benefit from economies of scale, where fixed costs like infrastructure, technology, and administration are spread over a higher volume of goods or services, reducing the cost per unit. Scale can also lead to bargaining power with suppliers, greater brand recognition, and more investment firepower. A virtuous cycle can ensue if a scaled company plays its cards right.

With $3.68 billion in revenue over the past 12 months, Dentsply Sirona has decent scale. This is important as it gives the company more leverage in a heavily regulated, competitive environment that is complex and resource-intensive.

A company’s long-term sales performance is one signal of its overall quality. Any business can put up a good quarter or two, but many enduring ones grow for years. Regrettably, Dentsply Sirona’s sales grew at a tepid 2% compounded annual growth rate over the last five years. This fell short of our benchmarks and is a tough starting point for our analysis.

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 performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 3.7% annually.

We can better understand the company’s sales dynamics by analyzing its constant currency revenue, which excludes currency movements that are outside their control and not indicative of demand. Over the last two years, its constant currency sales averaged 5.5% year-on-year declines. Because this number is lower than its normal revenue growth, we can see that foreign exchange rates have boosted Dentsply Sirona’s performance.

This quarter, Dentsply Sirona reported year-on-year revenue growth of 6.2%, and its $961 million of revenue exceeded Wall Street’s estimates by 4.2%.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection indicates its newer products and services will catalyze better top-line performance, it is still below the sector average.

Dentsply Sirona’s high expenses have contributed to an average operating margin of negative 8.8% 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 25.8 percentage points over the last five years. The company’s two-year trajectory also shows it failed to get its profitability back to the peak as its margin fell by 9.3 percentage points. This performance was poor no matter how you look at it - it shows its expenses were rising and it couldn’t pass those costs onto its customers.

In Q4, Dentsply Sirona generated a negative 14.5% operating margin. The company's consistent lack of profits raise a flag.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Dentsply Sirona, its EPS declined by 2.3% annually over the last five years while its revenue grew by 2%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

Diving into the nuances of Dentsply Sirona’s earnings can give us a better understanding of its performance. As we mentioned earlier, Dentsply Sirona’s operating margin expanded this quarter but declined by 25.8 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

In Q4, Dentsply Sirona reported adjusted EPS of $0.27, up from $0.26 in the same quarter last year. Despite growing year on year, this print missed analysts’ estimates. Over the next 12 months, Wall Street expects Dentsply Sirona’s full-year EPS of $1.59 to shrink by 4.1%.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Dentsply Sirona has shown decent cash profitability, giving it some flexibility to reinvest or return capital to investors. The company’s free cash flow margin averaged 7.8% over the last five years, slightly better than the broader healthcare sector.

Taking a step back, we can see that Dentsply Sirona’s margin dropped by 8.2 percentage points during that time. Continued declines could signal it is in the middle of an investment cycle.

Dentsply Sirona’s free cash flow clocked in at $101 million in Q4, equivalent to a 10.5% margin. This result was good as its margin was 6.5 percentage points higher than in the same quarter last year, but we wouldn’t read too much into the short term because investment needs can be seasonal, causing temporary swings. Long-term trends are more important.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? A company’s ROIC explains this by showing how much operating profit it makes compared to the money it has raised (debt and equity).

Dentsply Sirona’s five-year average ROIC was negative 10.4%, meaning management lost money while trying to expand the business. Its returns were among the worst in the healthcare sector.

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Over the last few years, Dentsply Sirona’s ROIC has unfortunately decreased significantly. Paired with its already low returns, these declines suggest its profitable growth opportunities are few and far between.

Dentsply Sirona reported $326 million of cash and $2.42 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $667 million of EBITDA over the last 12 months, we view Dentsply Sirona’s 3.1× net-debt-to-EBITDA ratio as safe. We also see its $44 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

We enjoyed seeing Dentsply Sirona beat analysts’ revenue expectations this quarter. On the other hand, its full-year revenue guidance missed and its full-year EPS guidance fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded up 8.1% to $13.76 immediately following the results.

Updated: February 27, 2026 at 12:12 AM EST

Before investing in or passing on Dentsply Sirona, we urge you to understand the company’s business quality (or lack thereof), valuation, and the latest quarterly results - in that order.

We see the value of companies making people healthier, but in the case of Dentsply Sirona, we’re out. To begin with, its revenue growth was uninspiring over the last five years, and analysts expect its demand to deteriorate over the next 12 months. While its solid free cash flow generation gives it reinvestment options, the downside is its relatively low ROIC suggests management has struggled to find compelling investment opportunities. On top of that, its declining operating margin shows the business has become less efficient.

Dentsply Sirona’s P/E ratio based on the next 12 months is 8.3x. While this valuation is optically cheap, the potential downside is huge given its shaky fundamentals. There are better investments elsewhere.

Wall Street analysts have a consensus one-year price target of $13.33 on the company (compared to the current share price of $13.67), implying they don’t see much short-term potential in Dentsply Sirona.