Guidance is stabilizing, cash generation is back on track, and the turnaround levers are starting to click — but the stock still trades at a discount to its pre-2022 multiples.
After a bruising stretch of supply chain snarls, execution missteps, and management turnover, Dentsply Sirona has spent the past 18 months in repair mode.
That reset is now showing up in the numbers: margins are improving, new products are hitting the market, and the balance sheet is cleaner.
Yet Wall Street’s expectations remain muted. For value investors, this is the kind of under-loved category leader that can quietly deliver outsized returns once the Street catches up.
Action: Accumulate shares between $28–$30 ahead of 2025 product launches and margin expansion updates.
A clean earnings beat in Q3 or Q4 could re-rate XRAY into the mid-30s as sentiment shifts from repair to growth.
Why the Market Overcorrected and What Comes Next
For most of 2023 and into early 2025, Dentsply Sirona sat in the penalty box.
Revenue was flat, leadership changes created a credibility gap, and the dental equipment cycle was soft enough that distributors started trimming orders.
The market wrote it off as another slow-growth medtech name with a bloated cost base and uneven execution.
But the last two quarters tell a different story.
Core consumables are holding up: Essential Dental Solutions revenue grew 2.9% year over year to $387 million; gross margins are expanding, with adjusted gross margin up 60 bps to 55.9%, and the company’s digital dentistry push, once a drag, is gaining traction with products like Primescan Connect.
The cost reset is flowing through to operating income, with adjusted operating profit up 22.3% to $170 million and operating margin expanding 400 bps to 18.2%, while supply chain hiccups that hurt service levels have eased.
Despite this, the stock still trades at a discount to peers, as if nothing’s changed.
To me, that’s the disconnect: the numbers are improving, EPS beat estimates by 4% at $0.52 on $936 million in revenue, the product cycle is turning, and management finally has some narrative control again.
If DS strings together a couple more clean beats, the Street will have to start pricing it like a growth-ready leader, not a turnaround case.
Digital Dentistry Could Be the Spark
Dentsply Sirona’s push into digital workflows isn’t just a buzzword pivot, it’s a margin and moat play.
The combination of imaging, CAD/CAM, and clear aligners creates a closed-loop ecosystem that’s tough for competitors to match.
Primescan & CEREC: New hardware upgrades are driving faster chairside workflows, which means higher throughput for dentists, a selling point that sticks even in softer macro cycles.
Clear Aligner Growth: The SureSmile platform is gaining share with competitive pricing and improved case turnaround times, setting up recurring revenue from lab services and materials.
Integration Stickiness: Practices that buy into the DS ecosystem tend to stay in it; the more products a clinic adopts, the higher the switching costs, supporting retention and upsell.
If execution holds, the digital segment could be the bridge between a cyclical recovery and long-term structural growth.
Sector Tailwinds Are Finally Lifting Off
The dental sector’s not bulletproof, but several macro shifts are starting to tilt the field in its favor, and DS has the size, balance sheet, and platform breadth to capitalize better than most.
Procedure volume is finally bouncing in Europe and Asia after a slower post-COVID recovery: Europe revenue rose 4.3% to $404 million in Q2, and Rest-of-World sales ticked up 0.5% to $239 million — helping offset the 18.3% drop in U.S. sales.
Elective and cosmetic visits — higher-margin, discretionary categories, are back in growth mode.
That means more consumables, more equipment usage, and more recurring revenue flowing through segments like Essential Dental Solutions, which grew 2.9% to $387 million and delivered an adjusted operating income of $151 million.
Demographics are an invisible tailwind here. An aging global population is driving steady restorative and prosthetic demand, both high-margin lanes where DS has entrenched share.
These categories aren’t tied to economic hype cycles; they’re driven by need, which gives them pricing resilience, reflected in Q2’s adjusted gross margin of 55.9%, up 60 bps year over year.
And then there’s the modernization wave.
Practices are shifting to same-day treatments and full digital workflows, a structural upgrade cycle that favors integrated platforms over standalone products.
DS’s lineup is positioned for this pivot, from imaging to CAD/CAM to cloud-based case management, all supported by cost discipline that pushed adjusted EBITDA to $197 million with a 21.1% margin, up from 17.5% a year ago.
Put together, this is a rising-tide backdrop that doesn’t need blockbuster innovation to pay off.
It’s about execution, market share defense, and making sure the upgrade cycle flows through DS’s platforms instead of competitors’.
Don’t Let These Undervalued Stocks Slip Through Your Fingers!
We now send our favorite value picks via text, too, so you’ll get the same actionable news without having to open your inbox.
Risks and Re-Rating Potential
The setup isn’t risk-free.
DS still has to prove it can keep margins stable after years of choppy performance. Integration across its digital suite isn’t a one-and-done, it’s a multi-quarter orchestration, and any stumble in rollout or adoption could slow momentum.
Lower-cost rivals are getting more aggressive in emerging markets, and defending the premium tier will require DS to keep its innovation pipeline and service quality sharp.
That said, the valuation is a cushion.
Shares still trade at a discount to historical levels and sector leaders, despite a clearer cost structure and a more predictable product roadmap. The market’s pricing DS like it’s still in repair mode.
If management delivers two or three clean quarters, steady revenue growth above the current $936 million run-rate, incremental margin gains beyond Q2’s 18.2% adjusted operating margin, and no guidance wobbles, sentiment could turn fast.
In that scenario, a re-rating toward peer multiples isn’t just possible, it’s likely.
For patient investors, that’s an asymmetric setup: downside protection from the current discount, with meaningful upside if the story continues to tighten.
Final Word: Betting on the Quiet Rebuilders
Dentsply Sirona is not chasing a flashy reinvention, it’s methodically rebuilding trust, operational discipline, and margin stability.
The combination of a leaner cost base, an increasingly integrated digital workflow, and solid recurring revenue from consumables gives this stock a fundamentally stronger core than it had just two years ago.
The market still seems to be anchoring to its past missteps, which leaves room for multiple expansion if execution stays clean.
In my view, DS is the kind of slow-burn value setup that rewards patience, with the potential for steady compounding once sentiment finally catches up.
Action Recap
✅ Buy Zone: Accumulate between $27–$29 while integration progress and margin stabilization remain underappreciated.
✅ Catalysts to Watch: Uptake of the Primescan Connect and other digital chairside solutions, plus gross margin expansion in 2H25.
✅ Medium-Term Target: $34–$36 on successful execution and multiple re-rating toward peer averages.
✅ Risk Management Tip: Monitor competitive pricing pressure and adoption timelines for new products; trim if margin trends reverse for two consecutive quarters.
From where I sit, Dentsply Sirona is quietly putting the pieces back together after a turbulent stretch.
The fundamentals are better than the market narrative suggests, and the valuation still reflects old baggage rather than the current trajectory.
If management keeps delivering on integration and product rollouts, this has all the hallmarks of a patient value investor’s win.
That’s our coverage for today, thanks for reading! Reply to this email with feedback or any names you want us to dig into next.
Best Regards,
—Noah Zelvis
Undervalued Edge
