After Patterson Companies, Inc.’s (NASDAQ:PDCO) earnings announcement on 26 January 2019, analysts seem fairly confident, as a 48% increase in profits is expected in the upcoming year, against the past 5-year average growth rate of -3.8%. With trailing-twelve-month net income at current levels of US$201m, we should see this rise to US$297m in 2020. Below is a brief commentary around Patterson Companies’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Readers that are interested in understanding the company beyond these figures should research its fundamentals here.
What can we expect from Patterson Companies in the longer term?
The view from 15 analysts over the next three years is one of positive sentiment. Generally, broker analysts tend to make predictions for up to three years given the lack of visibility beyond this point. To reduce the year-on-year volatility of analyst earnings forecast, I’ve inserted a line of best fit through the expected earnings figures to determine the annual growth rate from the slope of the line.
By 2022, PDCO’s earnings should reach US$351m, from current levels of US$201m, resulting in an annual growth rate of 17%. However, if we exclude extraordinary items from net income, we see that earnings is projected to fall over time, resulting in an EPS of $1.47 in the final year of forecast compared to the current $2.17 EPS today. With a current profit margin of 3.7%, this movement will result in a margin of 5.8% by 2022.
Future outlook is only one aspect when you’re building an investment case for a stock. For Patterson Companies, I’ve compiled three key aspects you should look at:
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Valuation: What is Patterson Companies worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether Patterson Companies is currently mispriced by the market.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Patterson Companies? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.