It has been about a month since the last earnings report for Patterson Companies, Inc. (NASDAQ:PDCO) . Shares have added about 4.3% in the past month, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it 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.
Recent Earnings
Patterson Companies reported adjusted earnings of 51 cents per share in second-quarter fiscal 2018, missing the Zacks Consensus Estimate of 54 cents. Earnings were also lower than the year-ago figure of 56 cents. Hurricanes hurt Patterson Companies’ earnings per share by approximately a penny in the quarter.
Net sales fell 2.3% from the year-ago quarter to $1.39 billion, which also missed the Zacks Consensus Estimate of $1.42 billion. Adjusting the effects of foreign currency exchange, sales declined 2.8% on a year-over-year basis, including a negative impact of approximately 60 basis points (bps) from the hurricanes.
Segmental Analysis
Animal Health Segment: This segment is a leading distributor of products, services and technologies to the production and companion animal health markets in North America and the U.K. Coming to the second-quarter performance of the platform (60% of total sales), sales increased almost 1.4% at constant currency (cc) on a year-over-year basis to $823.6 million.
Companion animal sales declined 1.4%. Production animal sales increased 4.2%, reflecting strong performance across all segments, especially in the swine business.
Dental Segment: This segment provides a virtually complete range of consumable dental products, equipment, software, turnkey digital solutions and value-added services to dentists and dental laboratories throughout North America. In the second quarter, dental sales (40% of total sales) declined 8.4% at cc year over year to approximately $553.6 million. The decline was led by decreased sales of CEREC and digital technology products.
Equipment sales in the dental segment fell 17.7%. Consumable dental supplies decreased 4.4%. However, other services and products, primarily comprising technical service, parts and labor, software support services and office supplies, increased 0.6%.
Share Repurchase Update
Patterson Companies repurchased approximately 1 million shares of its outstanding common stock for $36.5 million in the reported quarter. The company also paid $24.8 million in cash dividends to shareholders.
Guidance Downbeat
The company expects adjusted earnings per share for fiscal 2018 in the range of $2.00 to $2.10, way below the previously issued band of $2.25 to $2.40. Patterson Companies expects deal amortization expenses of $25.3 million or 27 cents per share. The company estimates integration and business restructuring expenses at $5.3 million or 6 cents per share.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimate flatlined during the past month. There has been one revision higher for the current quarter compared to one lower.
Patterson Companies, Inc. Price and Consensus
VGM Scores
At this time, the stock has a strong Growth Score of A, though it is lagging a lot on the momentum front with an F. However, 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.
Zacks' style scores indicate that the company's stock is suitable for value and growth investors.
Outlook
The stock has a Zacks Rank #5 (Strong Sell). We are looking for a below average return from the stock in the next few months.
Patterson Companies, Inc. (PDCO): Free Stock Analysis Report
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