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

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Patterson Companies, Inc. PDCO is scheduled to release third-quarter fiscal 2020 results on Feb 27, before the opening bell. While the core Patterson Dental segment is expected to have performed impressively, revenues at the Animal Health unit are likely to have been soft in the quarter.

The company delivered a positive earnings surprise of 3% in the last reported quarter, the trailing four-quarter positive earnings surprise being 11.4%, on average.

Q3 Estimates Picture

For the quarter to be reported, the Zacks Consensus Estimate for the company’s revenues is pegged at $1.42 billion, suggesting growth of 1.5% from the year-ago reported number. The same for adjusted earnings per share (EPS) is pinned at 37 cents, indicating a decline of 2.6% from the year-ago figure.

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

Factors to Consider

Being one of the leading distributors of consumable products and dental technology, Patterson Companies’ Dental arm has been one of the key contributors to the company’s top line.

Notably, management is optimistic about the U.S. consumables growth. Also, robust demand for the segment’s products like x-ray film, restorative materials, sterilization products, hand instruments and advanced dental equipment is likely to have boosted revenues in the quarter to be reported.

Reflective of this, the Zacks Consensus Estimate for the segment’s revenues is pegged at $586 million, suggesting a 3.7% rise sequentially.

Patterson Companies expects fiscal 2020 adjusted EPS between $1.36 and $1.46, up from the previously-communicated range of $1.33-$1.43.

Patterson Companies, Inc. Price and EPS Surprise


Patterson Companies, Inc. Price and EPS Surprise

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

On the flip side, management at Patterson Companies expects macroeconomic headwinds at the beef and dairy categories of its animal production business to have impacted the Animal Health unit. Meanwhile, Patterson Animal International had to cough up a total fine and forfeiture of $52.8 million to settle some legal issues in the third quarter.

In fact, the Zacks Consensus Estimate for the segment’s fiscal third-quarter revenues is pinned at $823 million, calling for a 2.9% decline sequentially.

Nonetheless, management is optimistic about the strength in swine business, which is expected to have partially offset the anticipated decline in the animal production business.

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. But that’s 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 #2.

Stocks Worth a Look

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

Nevro NVRO has an Earnings ESP of +3.45% and a Zacks Rank #2.

Burlington Stores (BURL - Free Report) has an Earnings ESP of +0.02% and a Zacks Rank #2.

ABM Industries ABM has an Earnings ESP of +10.87% and a Zacks Rank #3.

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