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What's in Store for Patterson Companies' (PDCO) Q2 Earnings?

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Patterson Companies, Inc. (PDCO - Free Report) is scheduled to release its second-quarter fiscal 2020 results on Dec 5, before the opening bell. While its core Animal Health segment is expected to have performed impressively, Patterson Dental revenues are likely to have been soft in the quarter.

The company delivered a positive earnings surprise of 8% in the last reported quarter, the trailing four-quarter positive earnings surprise being 2.2%, on average.

Which Way Are Estimates Headed?

For the quarter to be reported, the Zacks Consensus Estimate for the company’s revenues is pegged at $1.42 billion, suggesting growth of 0.8% from the year-ago reported number. The same for earnings is pinned at 35 cents, indicating a decline of 10.3% from the year-ago reported figure.

Let’s take a look at how things are shaping up prior to the earnings release.

Factors to Consider

Being the leading distributor of veterinary supplies to clinics, the public and private institutions, the Animal Health segment is expected to have boosted earnings in the fiscal second quarter.

Notably, the segment accounted for 61.5% of revenues in the last reported quarter. For the quarter to be reported, the Zacks Consensus Estimate for the segment’s revenues is pinned at $873 million, suggesting a rise of 2.1% year over year.

Management expects the Companion Animal and Production Animal businesses to have driven Animal Health in the quarter. Also, the company is constantly adding capabilities to strengthen the Animal Health arm. It has been capitalizing on significant market opportunity in Animal Health by offering a full and comprehensive suite of solutions.

The company also launched a platform called Pivotal at affordable prices for customers which is likely to show on the company’s second-quarter results.

Patterson’s fiscal second-quarter results are also expected to reflect gains from the VetSource tie-up, which aims at providing meaningful suite of tools to improve client relationships.

Patterson Companies, Inc. Price and EPS Surprise

 

Patterson Companies, Inc. Price and EPS Surprise

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

Reflective of these, Patterson continues to expect fiscal 2020 adjusted earnings per share in the range of $1.33 to $1.43.

However, an expected decline in Patterson’s core Dental unit revenues raises concern. In fact, the segment saw some softness in the last reported quarter as well (accounting for 37.7% of net revenues).

For the quarter to be reported, the Zacks Consensus Estimate for the segment’s revenues is pegged at $541 million, indicating a year-over-year drop of 0.4%.

Per management, the segment is expected to have seen a decline in equipment sales and consumable printed products in the quarter. In fact, the Zacks Consensus Estimate for second-quarter consumable printed product revenues stands at $298 million, suggesting a decline of 2% year over year.

Additionally, Patterson faces stiff competition in the U.S. dental products industry from the likes of Henry Schein Dental, a unit of Henry Schein (HSIC - Free Report) .

What Does Our Model Say?

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. However, this is not the case here.

Earnings ESP: Patterson Companies has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Stocks Worth a Look

Here are a few stocks which have the right combination to come up with an earnings beat this season.

The Cooper Companies (COO - Free Report) currently has an Earnings ESP of +0.74% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Allegiant Travel Company (ALGT - Free Report) currently has an Earnings ESP of +2.40% and a Zacks Rank #1.

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