What's In Store For Patterson Companies (PDCO) In Q4 Earnings?

Patterson Companies, Inc.’s (NASDAQ:PDCO) fourth-quarter fiscal 2019 results are expected to release on Jun 27, before the market opens. While its core segments — Patterson Dental and Animal Health — are expected to impress, a narrowed guidance for fiscal 2019 raises concern.

The company has a negative average earnings surprise of 4.4% in the trailing four quarters.

Which Way are Estimates Headed?

For the quarter to be reported, the Zacks Consensus Estimate for revenues is pegged at $1.43 billion, suggesting growth of 2% from the year-ago reported number. The same for earnings is pinned at 40 cents, indicating a decline of 33.3% from the year-ago reported figure.

Factors to Consider

We expect consumable and private label businesses to see robust growth in the fiscal fourth quarter, thereby driving Patterson Companies’ core Animal Health segment.

Notably, management is constantly adding new capabilities to strengthen the Animal Health arm. The company has been capitalizing on significant market opportunity in Animal Health by offering a full and comprehensive suite of solutions that allow veterinarians to offer all methods of serving their customers, including home delivery with tools that drive greater levels of compliance. This is expected to drive fiscal fourth-quarter results.

Coming to Patterson Dental, the segment saw year-over-year rise in revenues in the last reported quarter, after more than two years of dismal performance. This reflects that management has been stabilizing the unit through continued investments. Additionally, the dental portfolio is also witnessing a robust demand currently.

However, a narrowed guidance for fiscal 2019 earnings per share is worrisome.

Notably, the company now expects the metric to be $1.40-$1.45 compared with the previously communicated $1.40-$1.50.

We believe that stiff competition from Henry Schein Dental, a unit of Henry Schein (NASDAQ:HSIC) , and pricing pressures pose as headwinds for the company.

What Does Our Model Say?

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise in the quarter. However, this is not the case here.

Earnings ESP: Patterson Companies has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Patterson Companies currently carries a Zacks Rank #3.

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is seeing negative estimate revision.

Peer Releases

Here are two stocks that reported solid results in this earnings season.

Stryker Corporation (NYSE:SYK) delivered first-quarter 2019 adjusted earnings per share of $1.88, beating the Zacks Consensus Estimate by 2.2%. Revenues of $3.52 billion were in line with the Zacks Consensus Estimate. The stock presently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

DENTSPLY SIRONA Inc. (NASDAQ:XRAY) reported adjusted earnings per share of 49 cents in the first quarter of 2019, beating the Zacks Consensus Estimate of 38 cents. Revenues totaled $946.2 million and surpassed the Zacks Consensus Estimate of $917.1 million. The stock currently carries a Zacks Rank #2.

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