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PDCO Stock Falls on Q1 Earnings & Sales Miss, Gross Margin Up Y/Y
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Patterson Companies, Inc. (PDCO - Free Report) reported first-quarter fiscal 2025 adjusted earnings per share (EPS) of 24 cents, which missed the Zacks Consensus Estimate of 32 cents by 25%. The bottom line also declined 40% from the prior-year quarter’s level.
GAAP EPS in the quarter was 15 cents, down 53.1% from the bottom line recorded in the year-ago period.
PDCO’s Revenue Details
Net sales in the quarter were $1.54 billion, which missed the Zacks Consensus Estimate by 3.8%. The top line declined 2.2% year over year. Internal sales, adjusted for the effects of currency translation and the net impact of an interest rate swap, decreased 2.8% from the prior-year quarter’s figure.
Shares of this company were down 8.5% in pre-market trading. The company’s shares have lost 9.8% year to date against the industry's 1.1% growth. The S&P 500 Index has risen 17.9% in the same time frame.
Image Source: Zacks Investment Research
Segmental Analysis of PDCO
The company currently distributes products through its subsidiaries, Patterson Dental and Patterson Animal Health.
Dental Segment
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 of fiscal 2025, dental sales declined 2.8% year over year to $550.4 million. The decline was led by lower Value-added Services sales and the deflationary impact of certain infection control products.
Dental Consumable
Sales in the sub-segment totaled $344.1 million, down 2.3% from the year-ago quarter’s number.
Dental Equipment
Sales in the segment declined 2.7% on a year-over-year basis to $133.9 million.
Value-added Services and Other
This segment comprises technical services, parts and labor, software support services and office supplies. Sales declined 6.8% year over year to $72.4 million, primarily driven by the negative impact of the cybersecurity attack on Change Healthcare.
Animal Health Segment
This segment is a leading distributor of veterinary supplies to clinics, public and private institutions, and shelters across the United States.
In the fiscal first quarter, sales declined 2.8% to $982.4 million from the prior-year period’s level.
Corporate
The segment recorded a gain of $9 million against an expense of $1.5 million in the year-ago quarter.
Margin Analysis
Gross profit in the reported quarter was $312.6 million, down 2% year over year. As a percentage of revenues, the gross margin of 20.3% expanded approximately 10 basis points on a year-over-year basis.
Operating expenses amounted to $283.2 million, down 0.9% from the prior-year quarter’s figure.
The company reported an operating income of $29.4 million, down 23.2% from the year-ago quarter’s level.
Financial Position
PDCO exited the reported quarter with cash and cash equivalents of $148.1 million compared with $114.5 million in the fourth quarter of fiscal 2024.
Cumulative net cash used in operating activities at the end of the quarter was $285 million compared with $253.4 million in the prior-year period.
Fiscal 2025 Earnings Outlook
Patterson Companies maintained its earnings guidance for fiscal 2025. The company projects adjusted EPS to be in the range of $2.33-$2.43, and the Zacks Consensus Estimate for the same is pegged at $2.36.
Patterson Companies, Inc. Price, Consensus and EPS Surprise
PDCO ended first-quarter fiscal 2025 on a dismal note, wherein both earnings and revenues missed estimates. Quarterly results reflected the negative impact of a cybersecurity attack on the company’s claims processing vendor, Change Healthcare, leading to the inability to utilize insurance claim processing services by many dental practitioners.
Deflationary impact continues to hurt the Dental segment across the Consumables and Equipment categories. The continued negative impact of cybersecurity attacks raises uncertainty for the upcoming quarters.
Moreover, the weak companion animal market continues to pull down Animal Health sales. Although the company has maintained its EPS guidance for the fiscal year, PDCO’s performance is likely to remain weak amid ongoing deflationary and cyber-attack challenges.
PDCO’s Zacks Rank and Stocks to Consider
Patterson Companies currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Boston Scientific (BSX - Free Report) and The Cooper Companies (COO - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 17.5%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 24.24%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 47.8% compared with the industry’s 16.5% growth year to date.
Boston Scientific, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.6%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.18%.
BSX’s shares have risen 38.1% year to date compared with the industry’s 11.6% growth.
The Cooper Companies, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 11.3%. Its earnings surpassed estimates in two of the trailing four quarters and met the same in two, delivering an average surprise of 2.50%.
COO’s shares have lost 0.3% year to date against the industry’s 1.1% growth.
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PDCO Stock Falls on Q1 Earnings & Sales Miss, Gross Margin Up Y/Y
Patterson Companies, Inc. (PDCO - Free Report) reported first-quarter fiscal 2025 adjusted earnings per share (EPS) of 24 cents, which missed the Zacks Consensus Estimate of 32 cents by 25%. The bottom line also declined 40% from the prior-year quarter’s level.
GAAP EPS in the quarter was 15 cents, down 53.1% from the bottom line recorded in the year-ago period.
PDCO’s Revenue Details
Net sales in the quarter were $1.54 billion, which missed the Zacks Consensus Estimate by 3.8%. The top line declined 2.2% year over year. Internal sales, adjusted for the effects of currency translation and the net impact of an interest rate swap, decreased 2.8% from the prior-year quarter’s figure.
Shares of this company were down 8.5% in pre-market trading. The company’s shares have lost 9.8% year to date against the industry's 1.1% growth. The S&P 500 Index has risen 17.9% in the same time frame.
Image Source: Zacks Investment Research
Segmental Analysis of PDCO
The company currently distributes products through its subsidiaries, Patterson Dental and Patterson Animal Health.
Dental Segment
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 of fiscal 2025, dental sales declined 2.8% year over year to $550.4 million. The decline was led by lower Value-added Services sales and the deflationary impact of certain infection control products.
Dental Consumable
Sales in the sub-segment totaled $344.1 million, down 2.3% from the year-ago quarter’s number.
Dental Equipment
Sales in the segment declined 2.7% on a year-over-year basis to $133.9 million.
Value-added Services and Other
This segment comprises technical services, parts and labor, software support services and office supplies. Sales declined 6.8% year over year to $72.4 million, primarily driven by the negative impact of the cybersecurity attack on Change Healthcare.
Animal Health Segment
This segment is a leading distributor of veterinary supplies to clinics, public and private institutions, and shelters across the United States.
In the fiscal first quarter, sales declined 2.8% to $982.4 million from the prior-year period’s level.
Corporate
The segment recorded a gain of $9 million against an expense of $1.5 million in the year-ago quarter.
Margin Analysis
Gross profit in the reported quarter was $312.6 million, down 2% year over year. As a percentage of revenues, the gross margin of 20.3% expanded approximately 10 basis points on a year-over-year basis.
Operating expenses amounted to $283.2 million, down 0.9% from the prior-year quarter’s figure.
The company reported an operating income of $29.4 million, down 23.2% from the year-ago quarter’s level.
Financial Position
PDCO exited the reported quarter with cash and cash equivalents of $148.1 million compared with $114.5 million in the fourth quarter of fiscal 2024.
Cumulative net cash used in operating activities at the end of the quarter was $285 million compared with $253.4 million in the prior-year period.
Fiscal 2025 Earnings Outlook
Patterson Companies maintained its earnings guidance for fiscal 2025. The company projects adjusted EPS to be in the range of $2.33-$2.43, and the Zacks Consensus Estimate for the same is pegged at $2.36.
Patterson Companies, Inc. Price, Consensus and EPS Surprise
Patterson Companies, Inc. price-consensus-eps-surprise-chart | Patterson Companies, Inc. Quote
Our Take
PDCO ended first-quarter fiscal 2025 on a dismal note, wherein both earnings and revenues missed estimates. Quarterly results reflected the negative impact of a cybersecurity attack on the company’s claims processing vendor, Change Healthcare, leading to the inability to utilize insurance claim processing services by many dental practitioners.
Deflationary impact continues to hurt the Dental segment across the Consumables and Equipment categories. The continued negative impact of cybersecurity attacks raises uncertainty for the upcoming quarters.
Moreover, the weak companion animal market continues to pull down Animal Health sales. Although the company has maintained its EPS guidance for the fiscal year, PDCO’s performance is likely to remain weak amid ongoing deflationary and cyber-attack challenges.
PDCO’s Zacks Rank and Stocks to Consider
Patterson Companies currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Boston Scientific (BSX - Free Report) and The Cooper Companies (COO - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 17.5%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 24.24%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 47.8% compared with the industry’s 16.5% growth year to date.
Boston Scientific, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 12.6%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.18%.
BSX’s shares have risen 38.1% year to date compared with the industry’s 11.6% growth.
The Cooper Companies, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 11.3%. Its earnings surpassed estimates in two of the trailing four quarters and met the same in two, delivering an average surprise of 2.50%.
COO’s shares have lost 0.3% year to date against the industry’s 1.1% growth.