Patterson Cos. (PDCO) Up 3.5% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Patterson Cos. (PDCO). Shares have added about 3.5% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Patterson Cos. due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Patterson Companies Q4 Earnings Beat, Sales Hurt by FX
Patterson Companies reported adjusted earnings per share of 84 cents for fiscal fourth-quarter 2023, which beat the Zacks Consensus Estimate of 57 cents by 20%. The bottom line increased 18.3% from the prior-year quarter’s level.
GAAP earnings per share in the quarter was 77 cents, up 18.5% from that recorded in the year-ago period.
Revenue Details
Net sales in the quarter were $1.72 billion, which lagged the Zacks Consensus Estimate by 3.6%. The top line increased 5% year over year. Internal sales, adjusted for the effects of currency translation, increased 5.7% from the prior-year quarter’s figure.
Segmental Analysis
The company currently distributes products through its subsidiaries — Patterson Dental and Patterson Animal Health.
Dental Segment
This segment provides a complete range of consumable dental products, equipment, software, turnkey digital solutions and value-added services to dentists and laboratories throughout North America.
In the fiscal fourth quarter of 2023, dental sales improved 7.4% year over year to $683.5 million.
Dental Consumable
Sales in the sub-segment totaled $353.3 million, down 0.3% from the year-ago quarter’s number.
Dental Equipment & Software
Sales in the segment improved 18.5% on a year-over-year basis to $246.8 million.
Value-added Services and Other
This segment comprises of technical service, parts and labor, software support services and office supplies. Sales improved 13% year over year to $83.4 million.
Animal Health Segment
This segment is a leading distributor of veterinary supplies to clinics, public and private institutions, and shelters across the United States.
In the fiscal fourth quarter, the segment sales increased 3.2% to $1.03 billion from the prior-year period’s level.
Corporate
The segment recorded revenues of $5.5 million against expenses of $5.5 million in the year-ago quarter.
Margin Analysis
Gross profit in the reported quarter was $389.8 million, up 11.9% year over year. As a percentage of revenues, the gross margin of 22.6% expanded approximately 140 basis points (bps) on a year-over-year basis.
Operating expenses amounted to $284.7 million, up 3.4% from the prior-year quarter’s figure.
The company reported an operating income of $105.1 million, up 44.3% from the year-ago quarter’s level.
Financial Position
PDCO exited the fiscal fourth quarter with cash and cash equivalents of $159.7 million compared with $147.3 million on a sequential basis.
Cumulative net cash used in operating activities at the end of the quarter was $754.9 million compared with $981 million in the year-ago period.
Fiscal 2024 Earnings Outlook
Patterson Companies provided its earnings guidance for fiscal 2024. The company projects adjusted earnings per share in the range of $2.45-$2.55. The Zacks Consensus Estimate for the same is pegged at $2.28.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Patterson Cos. has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Patterson Cos. has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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
Patterson Companies, Inc. (PDCO) : Free Stock Analysis Report
