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Patterson Companies' (PDCO) Earnings Miss Estimates in Q4

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Patterson Companies, Inc. (PDCO - Free Report) reported adjusted earnings per share (EPS) of 37 cents in the fourth quarter of fiscal 2019, which missed the Zacks Consensus Estimate by 7.5%. However, the bottom line improved 23.3% year over year.
 
Net sales in the quarter were $1.44 billion, up 2.6% year over year, beating the Zacks Consensus Estimate by 0.6%.

FY19 at a Glance

Full-year adjusted earnings per share of $1.40 deteriorated 16.7% from $1.68 a year ago. The reported figure missed the Zacks Consensus Estimate of $1.43.

Revenues in fiscal 2019 grossed $5.57 billion, up 2% from the year-ago period. This figure met the Zacks Consensus Estimate.

Patterson Companies, Inc. Price, Consensus and EPS Surprise

 

Patterson Companies, Inc. Price, Consensus and EPS Surprise

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

Segmental Analysis
 
The company currently distributes products through subsidiaries Patterson Dental and Patterson Animal Health.

Dental Segment

This segment provides a complete range of consumable dental products, equipment, software, turnkey digital solutions and value-added services to dentists as well as laboratories throughout North America.
 
In the fourth quarter, dental sales rose 3.2% year over year to approximately $563.5 million.
 
Dental Consumable

 
Sales in the sub-segment totaled $312.1 million, down 1.9% year over year.
 
Dental Equipment & Software
 

Sales in the segment increased 11.9% on a year-over-year basis to $174.6 million.
 
Other
 
This segment comprises technical service, parts and labor, software support services and office supplies. Sales at the segment improved 7% on a year-over-year basis to $76.8 million.
 
Animal Health Segment

This segment is a leading distributor of veterinary supplies to clinics, public and private institutions and shelters across the United States.

Coming to the fourth-quarter performance of the platform, sales increased 2.2% on a year-over-year basis to $866.4 million.
 
Corporate
 
Sales at the segment were $6.8 million, dipped 0.7% from the year-ago quarter’s $6.9 million.
 
Gross Margin Analysis
 
Gross profit in the reported quarter was $312.5 million, up 7.8% year over year. As a percentage of revenues, gross margin of 21.8%, up 110 bps year over year.
 
Operating expenses in the reported quarter totaled $265.9 million, up nearly 7% on a year-over-year basis.

Fiscal 2020 Guidance

For fiscal 2020, Patterson Companies expects adjusted earnings per share in the range of $1.33 to $1.43. The mid-point of the guidance of $1.38 lies noticeably below the Zacks Consensus Estimate of $1.53.
 
Our Take
 
Patterson Companies ended the fourth quarter of fiscal 2019 on a mixed note. We are upbeat about the Animal Health segment’s solid performance of late. In fact, the Dental unit witnessed a year-over-year upside in the quarter as well. The company provides a wide range of consumable supplies, equipment, software and value-added services.
 
A broad spectrum of products cushions the company against economic downturns in the MedTech space. We believe that a diverse product portfolio, strong veterinary business prospects, accretive acquisitions and strategic partnerships are key catalysts.
 
Meanwhile, declining Dental Consumable revenues remains a concern. Increase in operating expenses add to woes.

Zacks Rank

Patterson Companies has a Zacks Rank #3 (Hold).

Earnings of MedTech Majors at a Glance

Some better-ranked stocks which reported solid results this earning season are Baxter International Inc. (BAX - Free Report) , DENTSPLY SIRONA Inc. (XRAY - Free Report) and CONMED Corporation (CNMD - Free Report) , each carrying a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here .

Baxter (BAX - Free Report) reported first-quarter 2019 adjusted earnings of 76 cents per share, which surpassed the Zacks Consensus Estimate of 68 cents by 11.8%. Revenues of $2.63 billion outpaced the Zacks Consensus Estimate of $2.62 billion.

DENTSPLY reported adjusted earnings per share (EPS) of 49 cents in the first quarter of 2019, beating the Zacks Consensus Estimate of 38 cents. Revenues of $946.2 million surpassed the Zacks Consensus Estimate of $917.1 million.

CONMED posted first-quarter 2019 adjusted earnings per share of 57 cents, which beat the Zacks Consensus Estimate of 54 cents. Revenues were $218.4 million, surpassing the Zacks Consensus Estimate of $213 million.

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