), a Minnesota-based distributor of dental, veterinarian and
rehabilitation medical supplies, is slated to report its first
quarter fiscal 2013 results before trading begins on Thursday,
Analysts polled by Zacks are currently expecting earnings per
share of 49 cents on revenues of $883 million. Earnings forecast
represent an estimated 15.87% year-over-year increase, indicating
an optimistic outlook.
With respect to earnings surprises, while the company managed to
beat the Zacks Consensus Estimate in the last quarter, it either
met or trailed in the previous three quarters. The company recorded
an average negative earnings surprise of 2.35% over the prior four
Fourth Quarter Recap
Patterson posted decent fourth quarter results with earnings
surpassing the Zacks Consensus Estimate by a penny. Revenues also
surpassed the Zacks Consensus Estimate with a year-over-year
increase of 6% to approximately $936.3 million. However, profit
slipped 0.9% year over year to roughly $62.1 million (or 58 cents a
share), impacted by the company's Employee Stock Ownership Plan
By business segment, revenues from Patterson Dental rose 4.5%
year over year to $598.9 million driven by healthy growth in sales
of dental equipment and software along with consumable supplies.
Sales of equipment and software offerings were boosted by higher
sales of CEREC products. Dental consumable and printed product
sales grew 3.3% to $331.1 million.
Revenues from the Webster Veterinary Supply unit increased 12.8%
year over year to $207.5 million, helped by the August 2011
acquisition of veterinary distributor American Veterinary Supply
Corporation, which Patterson bought in.
Sales from Patterson Medical segment inched up 2.5% to $130
million led by unexpected consumable sales in North America.
However, the division's equipment franchise continues to be
adversely impacted by uncertainty related to the U.S. health care
system, which is likely to persist throughout fiscal 2013.
Estimate Revisions Trend
Estimates for the first quarter demonstrate a lack of activity
with no movements in either direction over the last week and month.
A similar trend applies to fiscal 2013.
Given the lack of estimate revision, estimates for the first
quarter as well as fiscal 2013 have been stationary over the last 7
and 30 days. The current Zacks Consensus Estimate for fiscal 2013
is $2.14, representing an estimated 11.28% year-over-year
Neutral on Patterson Co.
We currently have a Neutral recommendation on the stock, which
carries a short-term Zacks #2 Rank (Buy).
Patterson provides a wide range of consumables, equipment and
software and value-added services to its customers. It should
benefit from improving North American dental industry
Patterson remains committed to delivering incremental returns to
investors by leveraging its earnings power. The company returned
$400 million to its shareholders in fiscal 2012, representing an
encouraging prospect for stakeholders.
Patterson's Rehabilitation Supply business is poised to be a key
long-term growth driver despite the unfavorable impact of the
proposed changes in the U.S. health care system, which is likely to
continue in 2013. In April 2012, it acquired Australia-based
distributor of rehabilitation, physiotherapy, and mobility
products,Surgical Synergies Pty Ltd to expand its presence in
Australia and New Zealand.
However, the company expects a loss of $45 million in fiscal
2013 in the Veterinary business due to a change in a distribution
deal with a nutritional vendor. Also, the equipment business under
Patterson Medical continues to be impacted by uncertainties related
to the U.S. health care reforms.
The company expects consumable sales from the dental business to
be a drag due to a weak global economy (especially Europe), high
unemployment rate and a complete lack of consumer confidence.
Moreover, Patterson faces significant competition in the dental
market, especially from
). In order to counter the competitive pressure, the company needs
to continue introducing new products. Failure to do so will dilute
the company's market share.
HENRY SCHEIN IN (HSIC): Free Stock Analysis
PATTERSON COS (PDCO): Free Stock Analysis
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