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Patterson Companies, Inc. (PDCO - Analyst Report) is set to report its fourth-quarter fiscal 2014 earnings results before the opening bell on May 22, 2014. Last quarter, the company had reported earnings in line with expectations. Let's see how things are shaping up for this announcement.

Factors at Play

In its third-quarter fiscal 2014, Patterson had reported adjusted earnings of 57 cents per share, beating the company's prior-year quarter earnings by 9.6%. However, the bottom line was on par with the Zacks Consensus Estimate.

During the reported quarter, Patterson's revenues increased 18.2% year over year to $1.1 billion, exceeding the the Zacks Consensus Estimate of $1,062 million. The growth was driven by solid improvement in the company's dental and veterinary businesses. Impressive top-line improvement and management's strong cost controls were the primary driving forces behind the company's better-than-expected earnings growth.

However, management expects the company's sales in this quarter  to be adversely affected by extreme weather conditions across all of its U.S.-based businesses.

Category wise, Patterson experienced 2.5% year-over-year growth in its Dental supply revenues to $641.9 million, with a 5.6% rise in its equipment and software sales. The Veterinary supply revenues grew 90.1% to $333.4 million, with an impressive 28% rise in equipment and software sales.

However, sales growth from Patterson's Rehabilitation unit declined 5.8% to $107.3 million, due to the divestiture of the non-core product line in the first quarter of fiscal 2014. Also, excluding the results of NVS acquisition, the company's adjusted gross margin declined 40 basis points to 32.4% in the reported quarter, compared to the prior- year period. This decline was a result of the faster relative growth of the U.S. veterinary unit, the higher percentage of equipment sales in the dental segment and pricing pressures in the international portion of the medical business.   

Based on its performance, management has lowered its earnings guidance to the range of $2.13–$2.20 per share for fiscal 2014, from the earlier range of $2.13–$2.24 per share. The Zacks Consensus Estimate of $2.16 lies within the guided range.

Earnings Whispers?

Our proven model does not conclusively show that Patterson is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the case here as you will see below.

Zacks ESP:  Patterson has a negative Zacks ESP. That is because the Most Accurate estimate stands at 64 cents while the Zacks Consensus Estimate is pegged higher at 66 cents. That leads to a difference of -3.03%.

Zacks Rank: Patterson has a Zacks Rank #4 (Sell) which lowers the predictive power of ESP. We caution against stocks with Zacks Ranks #4 and 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some companies you may want to consider instead as our model shows they have the right combination of elements to post an earnings beat this quarter:  

 Illumina Inc. (ILMN - Analyst Report), earnings ESP of +2.00% and a Zacks Rank #1 (Strong Buy).

Affymetrix, Inc. (AFFX - Analyst Report), earnings ESP of +33.33% and a Zacks Rank #2 (Buy).

Celgene Corporation (CELG - Analyst Report), earnings ESP of +0.66% and a Zacks Rank #2.

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