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Why Is Patterson Cos. (PDCO) Down 3.1% Since Last Earnings Report?

Zacks Equity Research
Biogen (BIIB) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

It has been about a month since the last earnings report for Patterson Cos. (PDCO). Shares have lost about 3.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Patterson Cos. due for a breakout? 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 Q3 Earnings Match Estimates, Animal Health Up

Patterson Companies reported adjusted earnings per share (EPS) of 38 cents in the third quarter of fiscal 2019, in line with the Zacks Consensus Estimate. Earnings however fell 11.6% year over year.

Net sales in the quarter were $1.40 billion, up 1.6% year over year, meeting the Zacks Consensus Estimate.

Segmental Analysis

Patterson Dental

In the third quarter, dental sales inched up 0.3% year over year to approximately $579.7 million.

Dental Consumable
Sales in the sub-segment totaled $294.7 million, down 2.5% year over year.

Dental Equipment & Software

Sales in the segment rose 5.1% on a year-over-year basis to $217.6 million.

Other

This segment comprises technical service, parts and labor, software support services as well as office supplies. Sales at the segment declined 1.8% on a year-over-year basis to $67.4 million.

Animal Health Segment

Coming to the third-quarter performance of the platform, sales increased almost 1.6% on a year-over-year basis to $807.5 million.

Corporate

Sales at the segment were $9.5 million, significantly up from the year-ago $2.5 million.

Gross Margin Analysis

Gross profit in the reported quarter was $299.5 million, down 1.6% year over year. As a percentage of revenues, gross margin of 21.4% was flat year over year.

Operating expenses in the reported quarter totaled $254.1 million, up 3.9% on a year-over-year basis.

Guidance

For fiscal 2019, Patterson Companies expects adjusted earnings per share in the range of $1.40 to $1.45.

How Have Estimates Been Moving Since Then?

Fresh estimates followed a downward path over the past two months.

VGM Scores

Currently, Patterson Cos. has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Charting a somewhat similar path, 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

Patterson Cos. has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.



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