Should Value Investors Buy Dentsply Sirona (XRAY) Stock?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company to watch right now is Dentsply Sirona (XRAY). XRAY is currently sporting a Zacks Rank #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 8.2. This compares to its industry's average Forward P/E of 16.70. Over the past 52 weeks, XRAY's Forward P/E has been as high as 12.54 and as low as 6.77, with a median of 9.97.

XRAY is also sporting a PEG ratio of 1.11. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. XRAY's industry currently sports an average PEG of 1.79. Over the past 52 weeks, XRAY's PEG has been as high as 1.91 and as low as 0.84, with a median of 1.11.

We should also highlight that XRAY has a P/B ratio of 1.59. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 4.34. XRAY's P/B has been as high as 2.16 and as low as 1.24, with a median of 1.64, over the past year.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. XRAY has a P/S ratio of 0.84. This compares to its industry's average P/S of 1.26.

Finally, investors should note that XRAY has a P/CF ratio of 15.45. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. XRAY's P/CF compares to its industry's average P/CF of 17.01. Over the past 52 weeks, XRAY's P/CF has been as high as 19.05 and as low as 7.83, with a median of 12.04.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Dentsply Sirona is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, XRAY feels like a great value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

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