Dentsply Sirona (NASDAQ: XRAY), one of the world’s largest makers of dental equipment and supplies, was created in 2016 when Dentsply merged with Sirona Dental Systems.
Fast forward to today, and the company is battling falling sales, mounting losses, and a stock price that has been hammered by more than 44% in the past year.
With shares down so sharply, investors are naturally asking has XRAY become a deep value opportunity, or is the decline a reflection of deeper problems?
Key Points
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Persistent losses, shrinking revenues, and high cash flow multiples suggest the stock isn’t truly undervalued.
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Sales have fallen from $4.23B in 2021 to $3.67B, U.S. sales dropped 18% last quarter, and dental implant revenue is shrinking despite the market growing at an 8% CAGR.
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A 4.5% dividend yield looks tempting, but weak cash flow and continued institutional selling signal caution.
Cheap on Some Metrics, Pricey on Others
On paper, XRAY looks inexpensive. The stock trades under 1x sales and 1.5x book value, multiples that typically attract value investors.
But dig a little deeper and the picture isn’t quite as rosy. Dentsply Sirona hasn’t generated positive GAAP net income for over two years.
Even so, analysts remain somewhat constructive. At over $14 per share, Wall Street’s consensus price target of $17.14 implies attractive upside.
The Real Pain Point Is Declining Revenues
The most troubling issue is that revenues are shrinking. Sales peaked at just over $4.2 billion 4 years ago but have since slid to $3.67 billion. That trend persisted in the most recent quarter.
While gross margin edged up to 52.4%, both GAAP earnings and cash flow went in the wrong direction. EPS fell deeper into the red, and operating cash flow collapsed by around 75% year over year.
Management now expects full-year sales to decline 2–4%, with adjusted EPS of at most $2.00.
Can Management Fix the Slide?
Executives say they’re refocusing on customers and making targeted investments to improve cash flow. Those sound like the right moves, but the impact may take years to materialize. In the meantime, macro headwinds aren’t helping.
One wildcard is trade policy. Tariffs are now costing Dentsply Sirona about $80 million annually.
A court ruling against the Trump-era reciprocal tariffs offers a glimmer of relief, but the final outcome will likely hinge on the Supreme Court.
Dividend Yield Is A Tempting Signal or Red Flag?
Perhaps the most eye-catching metric right now is XRAY’s dividend yield of nearly 4.5%, a level it has never approached in the past. For context, XRAY’s yield usually sat below 1%.
High yields can be attractive, but they may be a warning that the dividend isn’t sustainable. Given the company’s streak of losses and dwindling free cash flow, investors need to be cautious.
Now What?
Yes, XRAY looks cheap if you focus only on sales or book value multiples. But the bigger picture is less encouraging thanks to shrinking revenues, negative earnings, collapsing cash flow, and eroding share in growth markets like implants.
The stock may get a temporary lift if U.S. tariff policy changes, but that’s hardly a long-term investment thesis.
Until Dentsply Sirona can show sustained revenue growth and a return to consistent profitability, the “value” case looks more like a mirage.