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Reasons to Hold Patterson Companies (PDCO) in Your Portfolio
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Patterson Companies, Inc. (PDCO - Free Report) is well poised for growth in the coming quarters, courtesy of its broad product line. The optimism, led by a strong performance of certain business segments during third-quarter fiscal 2024 and a few notable acquisitions, is expected to contribute further. Integration risks and stiff competitive forces persist.
Shares of this Zacks Rank #3 (Hold) company have lost 3.9% year to date against the industry’s 6% growth. The S&P 500 Index has increased 9.6% during the same time frame.
The renowned global dental and animal health company has a market capitalization of $2.45 billion. It projects 8.2% growth for the next five years and expects to maintain its strong performance going forward. Patterson Companies’ earnings missed the Zacks Consensus Estimate in two of the trailing four quarters, beat once and met in the other, delivering an average surprise of 0.77%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Broad Product Spectrum: We are optimistic about Patterson Companies’ wide range of consumable supplies, equipment and software, and value-added services. A notable offering from PDCO is a private-label brand named Pivotal, while it continues to add stock-keeping units to its broader private-label portfolio. Patterson Companies’ NaVetor is an integrated cloud-based veterinary practice management software for its Animal Health segment.
Acquisitions: We are upbeat about PDCO’s strategy of expanding its business via strategic acquisitions. In January 2023, it announced that it had, through subsidiaries, completed the previously announced acquisition of substantially all the assets of Relief Services for Veterinary Practitioners and Animal Care Technologies.
During fiscal 2023, Patterson Companies completed its acquisition of the Texas-based companies, Veterinary Practitioners and Animal Care Technologies, which provide innovative solutions to veterinary practices through data extraction and conversion, staffing and video-based training services. In 2022, the company announced the acquisition of substantially all the assets of Dairy Tech, Inc., which provides pasteurizing equipment and single-use bags.
Fulfillment Facility Modernization to Optimize Supply: Patterson Companies started implementing strategic modernization of its existing fulfillment facilities and capabilities. It is adding new technologies, such as robots, to automate order picking and enhance the fulfillment pace.
PDCO is also focusing on expanding its fulfillment capacity by opening next-generation centers across several countries that will help build sustainable and more efficient channel capabilities. The company’s strategic investments in fulfillment centers should help alleviate capacity constraints, boost distribution capabilities and enhance growth.
To support its facility modernization and expansion, PDCO has allocated $51.2 million in capital spending during the first nine months of fiscal 2024, up 20.8% from the year-ago period’s level.
Strong Q3 Results:AlthoughPatterson Companies’ revenues and earnings missed estimates in third-quarter fiscal 2024, both the Dental and Animal Health segments showed signs of improvement. Sales in the Dental segment reflected steady demand for its consumable portfolio. In the Animal Health segment, the production animal business remained strong. A prudent cost-saving approach and solid sales execution worked in favor of the stock, expanding margin.
Downsides
Stiff Competition: The U.S. dental products distribution industry is highly competitive and consists chiefly of national, regional and local full-service and mail-order distributors. Patterson Companies needs to continue to introduce newer products in the market to withstand competitive pressures. Failure to do so can dilute its market share.
Integration Risks: PDCO has been on an acquisition spree, which is improving its revenue opportunities but aggravating integration risks. Regular acquisitions are also a distraction for management and are likely to impact organic growth. This may limit the company’s future expansion and worsen its risk profile.
Estimate Trend
The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $6.58 billion, indicating a 1.8% increase from the previous year’s level. The consensus mark for adjusted earnings per share is pinned at $2.32, implying a 4.1% year-over-year decline.
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora (COR - Free Report) .
DaVita, carrying a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.1%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 32% year to date compared with the industry’s 6.3% growth.
Cardinal Health, carrying a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.9%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.6%.
CAH’s shares have risen 12% year to date compared with the industry’s 4.8% growth.
Cencora, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 9.8%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.7%.
Cencora’s shares have rallied 18% year to date compared with the industry’s 5.8% growth.
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Reasons to Hold Patterson Companies (PDCO) in Your Portfolio
Patterson Companies, Inc. (PDCO - Free Report) is well poised for growth in the coming quarters, courtesy of its broad product line. The optimism, led by a strong performance of certain business segments during third-quarter fiscal 2024 and a few notable acquisitions, is expected to contribute further. Integration risks and stiff competitive forces persist.
Shares of this Zacks Rank #3 (Hold) company have lost 3.9% year to date against the industry’s 6% growth. The S&P 500 Index has increased 9.6% during the same time frame.
The renowned global dental and animal health company has a market capitalization of $2.45 billion. It projects 8.2% growth for the next five years and expects to maintain its strong performance going forward. Patterson Companies’ earnings missed the Zacks Consensus Estimate in two of the trailing four quarters, beat once and met in the other, delivering an average surprise of 0.77%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Broad Product Spectrum: We are optimistic about Patterson Companies’ wide range of consumable supplies, equipment and software, and value-added services. A notable offering from PDCO is a private-label brand named Pivotal, while it continues to add stock-keeping units to its broader private-label portfolio. Patterson Companies’ NaVetor is an integrated cloud-based veterinary practice management software for its Animal Health segment.
Acquisitions: We are upbeat about PDCO’s strategy of expanding its business via strategic acquisitions. In January 2023, it announced that it had, through subsidiaries, completed the previously announced acquisition of substantially all the assets of Relief Services for Veterinary Practitioners and Animal Care Technologies.
During fiscal 2023, Patterson Companies completed its acquisition of the Texas-based companies, Veterinary Practitioners and Animal Care Technologies, which provide innovative solutions to veterinary practices through data extraction and conversion, staffing and video-based training services. In 2022, the company announced the acquisition of substantially all the assets of Dairy Tech, Inc., which provides pasteurizing equipment and single-use bags.
Fulfillment Facility Modernization to Optimize Supply: Patterson Companies started implementing strategic modernization of its existing fulfillment facilities and capabilities. It is adding new technologies, such as robots, to automate order picking and enhance the fulfillment pace.
PDCO is also focusing on expanding its fulfillment capacity by opening next-generation centers across several countries that will help build sustainable and more efficient channel capabilities. The company’s strategic investments in fulfillment centers should help alleviate capacity constraints, boost distribution capabilities and enhance growth.
To support its facility modernization and expansion, PDCO has allocated $51.2 million in capital spending during the first nine months of fiscal 2024, up 20.8% from the year-ago period’s level.
Strong Q3 Results:AlthoughPatterson Companies’ revenues and earnings missed estimates in third-quarter fiscal 2024, both the Dental and Animal Health segments showed signs of improvement. Sales in the Dental segment reflected steady demand for its consumable portfolio. In the Animal Health segment, the production animal business remained strong. A prudent cost-saving approach and solid sales execution worked in favor of the stock, expanding margin.
Downsides
Stiff Competition: The U.S. dental products distribution industry is highly competitive and consists chiefly of national, regional and local full-service and mail-order distributors. Patterson Companies needs to continue to introduce newer products in the market to withstand competitive pressures. Failure to do so can dilute its market share.
Integration Risks: PDCO has been on an acquisition spree, which is improving its revenue opportunities but aggravating integration risks. Regular acquisitions are also a distraction for management and are likely to impact organic growth. This may limit the company’s future expansion and worsen its risk profile.
Estimate Trend
The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $6.58 billion, indicating a 1.8% increase from the previous year’s level. The consensus mark for adjusted earnings per share is pinned at $2.32, implying a 4.1% year-over-year decline.
Patterson Companies, Inc. Price
Patterson Companies, Inc. price | Patterson Companies, Inc. Quote
Stocks to Consider
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora (COR - Free Report) .
DaVita, carrying a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.1%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 32% year to date compared with the industry’s 6.3% growth.
Cardinal Health, carrying a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.9%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.6%.
CAH’s shares have risen 12% year to date compared with the industry’s 4.8% growth.
Cencora, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 9.8%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.7%.
Cencora’s shares have rallied 18% year to date compared with the industry’s 5.8% growth.