Varex Imaging (VREX) opened fiscal Q1 2026 with revenue of US$209.6 million and basic EPS of US$0.06, alongside net income of US$2.3 million. The trailing 12 month figures sit at US$854.4 million of revenue and a basic EPS loss of US$1.63 on net losses of US$67.7 million. Over recent quarters, revenue has moved between US$199.8 million and US$228.9 million, with basic EPS swinging from a loss of US$2.15 to a profit of US$0.29. This latest print lands in the middle of a wide profitability range and keeps the spotlight firmly on how margins evolve from here.

With the numbers on the table, the next step is to set this earnings profile against the most common narratives around Varex Imaging to see which views the results support and which they call into question.

Five year loss trend still weighs on the story

• On a trailing 12 month basis, Varex recorded net losses of US$67.7 million with basic EPS of a US$1.63 loss, and over the past five years losses grew at about 26% per year while revenue only grew about 3.4% annually.
• Bears focus on this widening loss profile and argue that pressures on margins could persist, pointing to items like the prior US$94 million goodwill impairment and tariff related costs as signs that earnings power has been under strain for some time.
  • The recent swing from a Q3 2025 net loss of US$89.1 million to a Q1 2026 profit of US$2.3 million shows how volatile net income has been, which critics read as evidence that consistent profitability is not yet in place.
  • Combined with modest trailing revenue growth of US$854.4 million versus US$811 million two years earlier, the cautious view is that cost pressures and slower growth rates could keep returns on past investments under pressure.

Bears argue that the recent profit blip may not tell the full story on Varex's challenges, especially with losses building over several years and only modest revenue growth to offset them. 🐻 Varex Imaging Bear Case

Interest coverage risk alongside modest 3.4% growth

• The risk snapshot flags that interest payments are not well covered by earnings over the trailing 12 months, at the same time as revenue has grown about 3.4% per year compared with a 10.4% benchmark for the broader US market.
• Analysts who take a more cautious stance see this combination of weaker growth and thin interest coverage as a key financial pressure point.
  • With the business still recording a trailing 12 month loss of US$67.7 million, bears argue that servicing debt from earnings alone looks tight, which could limit flexibility if business conditions soften.
  • The gap between Varex's 3.4% revenue growth and the 10.4% benchmark also feeds into the concern that slower growth makes it harder to grow into the current capital structure without stronger margins.

Low P/S and DCF gap support the bullish value angle

• The shares trade around US$13.61 while the provided DCF fair value is US$19.99 and the stock sits on a P/S of 0.7x versus 3.4x for peers and 3.1x for the wider US Medical Equipment group.
• Bullish investors point to this valuation gap as potential upside if the business can move closer to the earnings paths discussed in the more optimistic scenarios.
  • The risk and reward snapshot notes that the share price is roughly 31.9% below the DCF fair value and that analysts see a median implied rise of about 32.3%, which bulls take as support for a value argument.
  • At the same time, the low P/S relative to peers is interpreted by bulls as the market pricing in the current loss making status and interest coverage risk, so any sustained improvement from trailing net losses of US$67.7 million could have an outsized impact on how the stock is valued.

Bulls argue that a 0.7x P/S and a share price below the US$19.99 DCF fair value leave room if the company can shift away from the recent loss trend. 🐂 Varex Imaging Bull Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for Varex Imaging on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

See the numbers differently? If this earnings readout gives you a different angle, turn that view into your own narrative in just a few minutes, Do it your way.

A great starting point for your Varex Imaging research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

See What Else Is Out There

Between the five year loss trend, thin interest coverage and modest 3.4% revenue growth, Varex’s earnings profile still carries meaningful risk for more cautious investors.

If that mix of weak profitability and balance sheet pressure makes you uneasy, use our 85 resilient stocks with low risk scores to quickly focus on companies with more resilient financial profiles right now.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.