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Earnings Preview: Patterson Cos.

Zacks Equity Research

Patterson Companies Inc. (PDCO) is set to report its third-quarter fiscal 2013 results before the opening bell on Thursday, Feb 21. Let’s see how things are shaping up prior to the announcement.

In the last quarter, the Minn.-based distributor of dental, veterinarian and rehabilitation medical supplies posted a negative earnings surprise of 8.33%. Net income was impacted by unexpected lower sales of dental equipment and an incremental interest expense of $3.2 million associated with the company’s debt issuance in the third quarter of 2012.

Factors to Consider this Quarter

We believe that Patterson’s Veterinary business will maintain its growth momentum in this quarter. We are also upbeat regarding the alliance with Sirona Dental Systems Inc. (SIRO), which is likely to strengthen Patterson Dental’s leading position in the North American dental distribution business.

However, the company remains affected by tough macroeconomic issues in North America and international markets. Moreover, we wait to see how the company is tackling its internal operational issues.

Earnings Whispers?

Our proven model does not conclusively show that Patterson is likely to beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Read: Zacks Earnings ESP: A Better Method) and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here, as you will see below.

Zacks Earnings ESP: The Most Accurate Estimate stands at 52 cents, while the Zacks Consensus Estimate is also pegged at 52 cents. This comes to a difference of 0.00%.

Zacks Rank #2 (Buy). Patterson currently carries a Zacks Rank #2 (Buy). The Zacks Rank #2 together with 0.00% earnings ESP makes surprise prediction difficult.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right ingredients to post an earnings beat in the upcoming quarter:

Medical Action Industries Inc. (MDCI), Earnings ESP of +33.33% and Zacks Rank #1 (Strong Buy)

Steris Corp. (STE), Earnings ESP of +6.45% and Zacks Rank #2 (Buy)

Read the Full Research Report on PDCO

Read the Full Research Report on SIRO

Read the Full Research Report on MDCI

Read the Full Research Report on STE

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