Dental products company Envista Holdings (NYSE: NVST) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 7.7% year on year to $682.1 million. Its non-GAAP profit of $0.26 per share was 13.5% above analysts’ consensus estimates.

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Company Overview

Uniting more than 30 trusted brands including Nobel Biocare, Ormco, and DEXIS under one corporate umbrella, Envista Holdings (NYSE: NVST) is a global dental products company that provides equipment, consumables, and specialized technologies for dental professionals.

Revenue Growth

Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. Regrettably, Envista’s sales grew at a tepid 3.5% compounded annual growth rate over the last five years. This fell short of our benchmark for the healthcare sector and is a poor baseline 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. Envista’s recent performance shows its demand has slowed as its revenue was flat over the last two years.

This quarter, Envista reported year-on-year revenue growth of 7.7%, and its $682.1 million of revenue exceeded Wall Street’s estimates by 7%.

Looking ahead, sell-side analysts expect revenue to grow 1.8% 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.

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Operating Margin

Although Envista was profitable this quarter from an operational perspective, it’s generally struggled over a longer time period. Its expensive cost structure has contributed to an average operating margin of negative 1.3% 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, Envista’s operating margin decreased by 7 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 6.2 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.

This quarter, Envista generated an operating margin profit margin of 6.8%, up 189 percentage points year on year. This increase was a welcome development and shows it was more efficient.

Earnings Per Share

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 Envista, its EPS declined by 1.8% annually over the last five years while its revenue grew by 3.5%. However, its operating margin actually improved during this time, telling us that non-fundamental factors such as interest expenses and taxes affected its ultimate earnings.

Diving into the nuances of Envista’s earnings can give us a better understanding of its performance. As we mentioned earlier, Envista’s operating margin expanded this quarter but declined by 7 percentage points over the last five years. Its share count also grew by 6.5%, meaning the company not only became less efficient with its operating expenses but also diluted its shareholders.

In Q2, Envista reported adjusted EPS at $0.26, up from $0.11 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Envista’s full-year EPS of $0.86 to grow 30.3%.

Key Takeaways from Envista’s Q2 Results

We were impressed by how significantly Envista blew past analysts’ revenue expectations this quarter. We were also excited its full-year EPS guidance outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a solid print. The stock traded up 7.8% to $20.39 immediately after reporting.

Envista may have had a good quarter, but does that mean you should invest right now? We think that the latest quarter is only one piece of the longer-term business quality puzzle. Quality, when combined with valuation, can help determine if the stock is a buy. We cover that in our actionable full research report which you can read here, it’s free.