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Patterson Companies (PDCO) Q2 Earnings Top Estimates, Up Y/Y

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Patterson Companies, Inc. (PDCO - Free Report) reported adjusted earnings per share (EPS) of 63 cents in second-quarter fiscal 2021, which beat the Zacks Consensus Estimate by 65.8%. Moreover, the bottom line improved 61.5% from the prior-year quarter. The upside came on the back of sustained expense discipline, enhanced mix and solid sales execution.

Revenue Details

Net sales in the quarter were $1.55 billion, outpacing the Zacks Consensus Estimate by 8.8%. Also, the top line increased 9.5% year over year.

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, and laboratories throughout North America.

In the fiscal second quarter, dental sales grew 11.9% year over year to $631.7 million.

Dental Consumable

Sales in the sub-segment totaled $357.8 million, up 17.5% year over year.

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

Dental Equipment & Software

Sales in the segment climbed 5.3% on a year-over-year basis to $198.1 million.

Other

This segment comprises technical service, parts and labor, software support services and office supplies. Sales at the segment increased 5.5% on a year-over-year basis to $75.8 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.

In the fiscal second quarter, the segment sales rose 7.8% on a year-over-year basis to $914.2 million.

Corporate

Sales at the segment were $7.2 million, which improved 21.7% from $5.9 million in the year-ago quarter.

Margin Analysis

Gross profit in the reported quarter was $320.4 million, up 6.3% year over year. As a percentage of revenues, gross margin of 20.6% contracted 70 basis points (bps) on a year-over-year basis.

Operating expenses in the reported quarter totaled $246.7 million, declining 22.8% from the prior-year quarter.

The company reported operating income of $73.7 million, against the year-ago quarter’s operating loss of $18.1 million.

Financial Position

The company exited the fiscal second quarter with cash and cash equivalents of $139.5 million, up from $119.6 million on a sequential basis.

Cumulative net cash used in operating activities in the fiscal second quarter were $423 million, significantly wider than the year-ago quarter’s net cash utilized in operating activities of $14.7 million.

Fiscal 2021 Guidance

Patterson Companies refrained from issuing fiscal 2021 financial guidance at this time citing the persistent uncertainty with respect to the COVID-19 pandemic and its impact on business operations.

Our Take

Patterson Companies ended second-quarter fiscal 2021 on a strong note, wherein both earnings and revenues beat the consensus mark. Moreover, the company witnessed improved performance across its segments in the quarter under review. Prudent cost savings approach and solid sales execution worked well for the stock.

Also, 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.

However, contraction in gross margin remains a headwind.

Zacks Rank

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

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Thermo Fisher Scientific Inc. (TMO - Free Report) , Align Technology, Inc. (ALGN - Free Report) and Bio-Rad Laboratories, Inc. (BIO - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Align Technology reported third-quarter 2020 adjusted EPS of $2.25, which surpassed the Zacks Consensus Estimate by 281.4%. Revenues of $734.1 million outpaced the consensus mark by 38%.

Thermo Fisher reported third-quarter 2020 adjusted EPS of $5.63, beating the Zacks Consensus Estimate by 28.8%. Revenues of $8.52 billion surpassed the consensus mark by 10%.

Bio-Rad Laboratories reported third-quarter 2020 adjusted earnings per share (EPS) of $3, which beat the Zacks Consensus Estimate by 62.2%. Revenues of $647.3 million surpassed the consensus mark by 14.5%.

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