Patterson Companies, Inc. PDCO has been gaining investor confidence on continued impressive performance. In a month’s time, the stock has gained 2.2% against the industry’s 0.9% decline.
A growing diversified product portfolio, solid Dental business prospects, accretive acquisitions and strategic partnerships are key growth drivers for Patterson Companies. However, it slashed guidance for fiscal 2019 indicates looming concerns ahead.
Here we take a quick look at the primary factors that have been plaguing Patterson Companies and discuss the prospects that ensure near-term recovery.
Patterson Companies has trimmed its fiscal 2019 guidance for earnings. Notably, the company expects earnings in the range of $1.40-$1.45 per share compared with $1.40-$1.50 anticipated earlier.
This apart, the company faces cutthroat competition from the U.S. dental products distribution industry.
Further, Patterson Companies looks a bit expensive at the moment. A comparative analysis of the company’s forward P/S (TTM basis) ratio reflects a relatively gloomy picture. The stock currently trades at a P/S ratio of 0.38, a bit higher than 0.29x for the industry.
Factors that Bode Well
Patterson Companies is expected to take advantage from the gradual recovery in the dental market and the rebounding dental equipment business (especially in North America), assisted by increased technology marketing/promotional activities. A research report by the Grand View Research suggests that the global dental equipment market is projected to witness a CAGR of 4.9% by 2020.
Additionally, this Zacks Rank #3 (Hold) company has taken some robust initiatives like dental sales force realignment, integration with animal health and the implementation of the company’s enterprise resource planning system. With the acquisition of Fitzpatrick Dental Design, Patterson Companies aims to strengthen its equipment designs and expand its capabilities thereafter.
In fact, it is encouraging to note that Patterson Companies’ dental sales in the fiscal third quarter of fiscal 2019 inched up 0.3% year over year to approximately $579.7 million. The uptick can be attributed to double-digit growth in the CAD/CAM categories. Although Dental Consumables saw a year-over-year decline in revenues, it was partially offset by the Dental Equipment & Software and Other sub units’ solid performance.
Which Way Are Estimates Treading?
The Zacks Consensus Estimate for fiscal 2019 earnings is pegged at $1.43, reflecting a 14.9% decline year over year. The same for revenues stands at $5.57 billion, mirroring a 1.9% improvement year over year.
Patterson Companies, Inc. Price and Consensus
Patterson Companies, Inc. Price and Consensus | Patterson Companies, Inc. Quote
Despite the temporary sluggishness, Patterson Companies seems to be well-positioned for growth backed by strong prospects in the Dental segment.
Want More From the MedTech Industry?
A few better-ranked stocks from the MedTech space are ABIOMED, Inc. ABMD, IDEXX Laboratories, Inc. IDXX and Wright Medical Group N.V. WMGI, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ABIOMED’s long-term expected earnings growth rate is projected at 27.7%.
IDEXX Laboratories delivered a positive earnings surprise in each of the trailing four quarters, the average being 7.2%.
Wright Medical Group has a long-term earnings growth rate of 11.3%.
This Could Be the Fastest Way to Grow Wealth in 2019
Research indicates one sector is poised to deliver a crop of the best-performing stocks you'll find anywhere in the market. Breaking news in this space frequently creates quick double- and triple-digit profit opportunities.
These companies are changing the world – and owning their stocks could transform your portfolio in 2019 and beyond. Recent trades from this sector have generated +98%, +119% and +164% gains in as little as 1 month.
Click here to see these breakthrough stocks now >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ABIOMED, Inc. (ABMD) : Free Stock Analysis Report
IDEXX Laboratories, Inc. (IDXX) : Free Stock Analysis Report
Wright Medical Group N.V. (WMGI) : Free Stock Analysis Report
Patterson Companies, Inc. (PDCO) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research