Patterson Companies Continues to Face Weaknesses - Analyst Blog


On Aug 13, we have updated our research report on Patterson Companies Inc. ( PDCO ). The St. Paul, MN-based distributor of dental, companion-pet veterinarian and rehabilitation supplies continues to face weaknesses due to intense competition, unfavorable currency fluctuations and an uncertain macroeconomic environment.

Patterson Companies' adjusted earnings per share in the fourth-quarter of fiscal 2014 went down by a penny to 61 cents from the year-ago quarter and missed the Zacks Consensus Estimate by 5 cents. Adjusted net earnings fell 3.4% to $61.4 million from $63.6 million in the year-ago quarter.

Revenues in the quarter grew 14.2% to $1,102.1 million, but fell short of the Zacks Consensus Estimate of $1,123 million.

Adjusted gross margin fell 130 basis points (bps) to 32.3% in the quarter from 33.6% a year ago. Adjusted operating margin also dipped 70 bps to 10.1% from 10.8% in the fiscal 2014 quarter.

Inclement weather, tough macroeconomic environment and unfavorable currency fluctuations were attributable for disappointing earnings and margins during the quarter.

Patterson Companies faces significant competition. The U.S. dental products distribution industry is highly competitive and consists principally of national, regional and local full-service and mail-order distributors.

Further, Patterson Companies has a significant key supplier concentration. The company's top 10 supply vendors account for more than 40% of its cost of dental products sold in a fiscal year.

Currently, Patterson Companies carries a Zacks Rank #4 (Sell). The company will release its fiscal 2015-first quarter results on Aug 21 before the opening bell.

Some better-ranked stocks from the medical/dental supplies industry include McKesson Corp. ( MCK ) and from the medical products industry include ICU Medical, Inc. ( ICUI ) and Symmetry Medical, Inc. ( SMA ). ICU Medical sports a Zacks Rank #1 (Strong Buy), while both McKesson and Symmetry Medical carry a Zacks Rank #2 (Buy).

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PATTERSON COS (PDCO): Free Stock Analysis Report

MCKESSON CORP (MCK): Free Stock Analysis Report

SYMMETRY MEDICL (SMA): Free Stock Analysis Report

ICU MEDICAL INC (ICUI): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: PDCO , MCK , SMA , ICUI

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