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What's in Store for Patterson Companies (PDCO) in Q3 Earnings?

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Patterson Companies, Inc. (PDCO - Free Report) is set to release third-quarter fiscal 2024 results on Feb 28, before the opening bell.

The company missed on earnings in the last reported quarter. Its earnings beat the Zacks Consensus Estimate in two of the trailing four quarters, missed in one and met in the other, delivering an average surprise of 2.02%.

Q3 Estimates

For the to-be-reported quarter, the Zacks Consensus Estimate for the company’s revenues is pegged at $1.63 billion, indicating a 2% increase from the prior-year period’s level.

The consensus mark for adjusted earnings per share is pinned at 60 cents, indicating a 3.2% decline from that recorded in the year-ago quarter.

Factors to Note

As one of the leading distributors of consumable products and dental technology, Patterson Companies’ dental arm is a key contributor to its top line.

Per management, in the second quarter of fiscal 2024, sales in this segment decreased 0.2% year over year. Sales in the dental segment reflected steady demand for its consumable portfolio, as well as value-added services. However, soft demand for certain high-tech dental equipment categories continues to hurt sales. The trend is expected to have continued in the third quarter.

In the second quarter of fiscal 2024, sales in the Animal Health segment increased 0.9% on a year-over-year basis. The Animal Health segment has been gaining from growth in pet adoptions and increased attention to pets.

On its second-quarter fiscal 2024 earnings call, the company stated that the production animal business remained strong while the companion animal business reflected moderating veterinary clinic visits. However, long-term tailwinds of higher pet ownership in the past two years are likely to have boosted companion animal business sales. Although sales are likely to have been on the higher side during the soon-to-be-reported quarter, the upcoming results will provide clarity on veterinary clinic visit trends.

Foundation initiatives, including improved mix, exercising expense discipline and leveraging cost structure, are expected to have boosted gross and operating margins during the to-be-reported quarter.

Moreover, software solutions and equipment service sales are likely to have generated additional revenues during the fiscal third quarter. However, ongoing challenges of inflationary trends and higher interest rates might have hurt sales and weighed on the company’s overall quarterly performance.

Patterson Companies, Inc. Price and EPS Surprise

Patterson Companies, Inc. Price and EPS Surprise

Patterson Companies, Inc. price-eps-surprise | Patterson Companies, Inc. Quote

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for PDCO this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here, as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% for Patterson Companies.

You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: Patterson Companies currently carries a Zacks Rank #4 (Sell).

Stocks Worth a Look

SiBone (SIBN - Free Report) has an Earnings ESP of +1.75% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

SIBN has an estimated earnings growth rate of 36.3% for fiscal 2023. It delivered a trailing four-quarter average earnings surprise of 24.21%.

Merit Medical Systems (MMSI - Free Report) has an Earnings ESP of +0.43% and a Zacks Rank of 3 at present.

The stock has an estimated earnings growth rate of 10% for fiscal 2023. MMSI’s earnings beat estimates in the last reported quarter. It has a trailing four-quarter average earnings surprise of 14.41%.

Universal Health Services (UHS - Free Report) has an Earnings ESP of +1.44% and a Zacks Rank #3 at present. UHS has an estimated earnings growth rate of 5.3% for 2023.

UHS’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 5.47%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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