Patterson Companies, Inc. PDCO is set to release second-quarter fiscal 2025 results on Aug. 28, before the opening bell.
The company missed on earnings in the last reported quarter. Its earnings missed the Zacks Consensus Estimate in three of the trailing four quarters and met in one, delivering a negative average surprise of 4.53%.
Q2 Estimates
The Zacks Consensus Estimate for the company’s revenues is pegged at $1.64 billion, down 0.7% year over year.
The consensus mark for adjusted earnings per share is pinned at 49 cents, indicating a 2% decline from the bottom line recorded in the year-ago quarter.
Factors to Note
Patterson Companies reports quarterly results under two segments — Dental and Animal Health. The company is likely to record a year-over-year improvement in revenues for both segments. However, certain sub-segments are projected to have experienced challenging market dynamics.
Consumables to Drive Dental Segment
The company’s Dental segment sales are expected to have been weak as the deflationary impact might have continued to hurt the Dental segment across the Consumables category. The continued negative impact of cybersecurity attacks raises uncertainty for the upcoming quarter due to the inability of many dental practitioners to process insurance claims.
The company continues to face challenges in core equipment and CAD/CAM categories. Lower overall consumer spending and higher interest rates are likely to have moderated equipment purchases by dental practices during the fiscal second quarter.
Meanwhile, PDCO continues to focus on boosting its sales for this segment. The company announced an agreement with PDS Health to extend their relationship through the end of 2027. The extension is expected to allow Patterson Companies to continue as the premier distributor of all merchandise, services, technology and core equipment. In January, it also inked a deal with Convergent Dental, gaining exclusive distributor rights for Solea Laser in North America.
Patterson Companies, Inc. Price and EPS Surprise
Patterson Companies, Inc. price-eps-surprise | Patterson Companies, Inc. Quote
Production Animal Sales to Aid Animal Health
Patterson Companies’ Animal health segment sales are likely to have been hurt by moderation in veterinary clinic traffic and the company’s strategic decisions to focus on more profitable business, leading to short-term loss of sales from low-margin businesses. However, the strategy is likely to have boosted profit margins during the soon-to-be-reported quarter.
However, the strong performance of the production animal business is likely to have continued in the soon-to-be-reported quarter, driven by omnichannel presence, highly tailored distribution strategy and comprehensive offering across animal species.
Value-Added Services Continue to Expand
Both segments of Patterson Companies are likely to have continued to benefit from its growing portfolio of value-added services. Although sales from value-added services declined during the first quarter, these services aid in retaining existing customers and driving new customer additions. The software and services are higher-margin products, thereby enhancing the business’s margins.
PDCO added a few services during the past few months, including Patterson CarePay+ and the integration of Second Opinion into Patterson's Eaglesoft practice management software, which caters to its Dental customers. It also announced new integration features within Weave and the Patterson Dental practice management software solutions, Fuse, Eaglesoft and Dolphin Management, improving data exchange among various services.
The company’s recently launched Turnkey insights platform reflected robust performance in the fiscal first quarter. The trend is likely to have continued in the second quarter. PDCO entered into a collaboration with LEED for automated veterinary practice tools. These tools are likely to have aided sales during the fiscal second quarter. PDCO may provide updates on the performance of these tools and new additions during the earnings call.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for PDCO this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here, as you will see below.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00% for Patterson Companies.
You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.
Zacks Rank: Patterson Companies currently carries a Zacks Rank #3 (Hold).
Stocks Worth a Look
The Cooper Companies COO has an Earnings ESP of +1.25% and a Zacks Rank of 3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
COO has an earnings growth rate of 14.4% for 2024. Its earnings beat estimates in the last reported quarter. It has a trailing four-quarter average earnings surprise of 3.87%.
Henry Schein HSIC has an Earnings ESP of +0.16% and a Zacks Rank of 3 at present.
HSIC has an estimated earnings growth rate of 6% for 2024. The company’s earnings beat estimates in the last reported quarter. It delivered a trailing four-quarter average earnings surprise of 2.85%.
West Pharmaceutical Services WST has an Earnings ESP of +0.43% and a Zacks Rank #3 at present. WST’s earnings is estimated to decline 17.8% in 2024.
WST’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 8.04%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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