Why Is Patterson Cos. (PDCO) Up 5.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Patterson Cos. (PDCO). Shares have added about 5.9% 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 the most recent earnings report in order to get a better handle on the important drivers.
Patterson Companies Earnings Beat Estimates in Q1
Patterson Companies, Inc. reported adjusted earnings per share of 27 cents in the first quarter of fiscal 2020, which beat the Zacks Consensus Estimate by 8%. Moreover, the bottom line improved 3.8% year over year.
Net sales in the quarter were $1.33 billion, missing the Zacks Consensus Estimate by 2.9%. Further, the figure declined 0.6% year over year.
The company currently distributes products through subsidiaries Patterson Dental and Patterson Animal Health.
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 first quarter, dental sales declined 1% year over year to approximately $501.1 million.
Sales in the sub-segment totaled $302 million, down 0.7% year over year.
Dental Equipment & Software
Sales in the segment fell 6.9% on a year-over-year basis to $125.7 million.
This segment comprises technical service, parts and labor, software support services and office supplies. Sales at the segment improved 9.8% on a year-over-year basis to $73.4 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.
Coming to the first-quarter performance of the platform, sales declined 0.9% on a year-over-year basis to $817.5 million.
Sales at the segment were $9.9 million, soaring 97.9% from the year-ago quarter’s figure of $5 million.
Gross Margin Analysis
Gross profit in the reported quarter was $290.1 million, up 2.3% year over year. As a percentage of revenues, gross margin of 21.8%, improved 60 bps year over year.
Operating expenses in the reported quarter totaled $273.4 million, down 2.1% on a year-over-year basis.
Operating income came in at $16.7 million, which improved a whopping 269.4% from the year-ago quarter. Operating margin of 1.3% improved 100 bps from the prior-year quarter.
Fiscal 2020 Guidance
For fiscal 2020, Patterson Companies continues to expect adjusted earnings per share in the range of $1.33 to $1.43. The mid-point of the guidance of $1.38 is in line with the Zacks Consensus Estimate.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a flat path over the past two months.
At this time, Patterson Cos. has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
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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