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Patterson Companies (PDCO) Down 7.8% Since Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Patterson Companies, Inc. (PDCO - Free Report) . Shares have lost about 7.8% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is PDCO due for a breakout? 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 catalysts.
Recent Earnings
Patterson Companies reported adjusted earnings of 43 cents per share in third-quarter fiscal 2018, missing the Zacks Consensus Estimate of 51 cents. Earnings fell 25.9% year over year.
Net sales dipped 1.6% from the year-ago quarter to $1.375 billion, lagging the Zacks Consensus Estimate of $1.382 billion.
Adjusting the effects of foreign currency exchange, sales declined 2.7% on a year-over-year basis.
Decreased sales and gross margin-compression marred the company’s results in the reported quarter.
Segmental Analysis
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 third quarter, dental sales (42% of total sales) declined 8.1% at cc year over year to approximately $577.9 million. Changes in sales force, disruptions from enterprise resource planning implementation and the expansion of the company’s digital equipment portfolio marred revenues in the segment.
Dental Consumable
Sales in the segment were $302.3 million, down 7.4% year over year. Dental Equipment & Software
Sales at the segment declined 10.6% on a year-over-year basis to $207 million.
Other Services and Products
This segment is primarily composed of technical service, parts and labor, software support services and office supplies decreased 3.4% on a year-over-year basis to $65.6 million.
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 third-quarter performance of the platform (58% of total sales), sales increased almost 4.2% at cc on a year-over-year basis to $794.9 million.
Margin Analysis
Gross profit in the reported quarter was $294.7 million, down 10.6% year over year. As a percentage of revenues, gross margin contracted 200 basis points (bps) to 21.4% in the quarter.
Operating income in the third quarter was $50.04 million, up 7.5% year over year. . As a percentage of revenues, operating margin expanded 31 bps to 21.4% in the quarter.
Share Repurchase Update
Patterson Companies repurchased approximately 0.4 million shares of outstanding common stock for $13.5 million in the reported quarter. The company also paid $24.7 million in cash dividends to shareholders.
Guidance Downbeat
The company expects adjusted earnings per share for fiscal 2018 in the range of $1.65-$1.70, much lower than the previously issued band of $2-$2.10.
Patterson Companies expects deal amortization expenses of $26.9 million or 29 cents per share.
The company estimates integration and business restructuring expenses of $5.7 million or 6 cents per share.
Global companion animal sales inched up 0.4%. Production animal sales increased 8.8%, reflecting strong performance across swine and beef-cattle segment.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been eight revisions lower for the current quarter. In the past month, the consensus estimate has shifted by 52.16% due to these changes.
At this time, PDCO has a subpar Growth Score of D, though it is lagging a bit on the momentum front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise PDCO has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Patterson Companies (PDCO) Down 7.8% Since Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Patterson Companies, Inc. (PDCO - Free Report) . Shares have lost about 7.8% in that time frame.
Will the recent negative trend continue leading up to its next earnings release, or is PDCO due for a breakout? 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 catalysts.
Recent Earnings
Patterson Companies reported adjusted earnings of 43 cents per share in third-quarter fiscal 2018, missing the Zacks Consensus Estimate of 51 cents. Earnings fell 25.9% year over year.
Net sales dipped 1.6% from the year-ago quarter to $1.375 billion, lagging the Zacks Consensus Estimate of $1.382 billion.
Adjusting the effects of foreign currency exchange, sales declined 2.7% on a year-over-year basis.
Decreased sales and gross margin-compression marred the company’s results in the reported quarter.
Segmental Analysis
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 third quarter, dental sales (42% of total sales) declined 8.1% at cc year over year to approximately $577.9 million. Changes in sales force, disruptions from enterprise resource planning implementation and the expansion of the company’s digital equipment portfolio marred revenues in the segment.
Dental Consumable
Sales in the segment were $302.3 million, down 7.4% year over year.
Dental Equipment & Software
Sales at the segment declined 10.6% on a year-over-year basis to $207 million.
Other Services and Products
This segment is primarily composed of technical service, parts and labor, software support services and office supplies decreased 3.4% on a year-over-year basis to $65.6 million.
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 third-quarter performance of the platform (58% of total sales), sales increased almost 4.2% at cc on a year-over-year basis to $794.9 million.
Margin Analysis
Gross profit in the reported quarter was $294.7 million, down 10.6% year over year. As a percentage of revenues, gross margin contracted 200 basis points (bps) to 21.4% in the quarter.
Operating income in the third quarter was $50.04 million, up 7.5% year over year. . As a percentage of revenues, operating margin expanded 31 bps to 21.4% in the quarter.
Share Repurchase Update
Patterson Companies repurchased approximately 0.4 million shares of outstanding common stock for $13.5 million in the reported quarter. The company also paid $24.7 million in cash dividends to shareholders.
Guidance Downbeat
The company expects adjusted earnings per share for fiscal 2018 in the range of $1.65-$1.70, much lower than the previously issued band of $2-$2.10.
Patterson Companies expects deal amortization expenses of $26.9 million or 29 cents per share.
The company estimates integration and business restructuring expenses of $5.7 million or 6 cents per share.
Global companion animal sales inched up 0.4%. Production animal sales increased 8.8%, reflecting strong performance across swine and beef-cattle segment.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. There have been eight revisions lower for the current quarter. In the past month, the consensus estimate has shifted by 52.16% due to these changes.
Patterson Companies, Inc. Price and Consensus
Patterson Companies, Inc. Price and Consensus | Patterson Companies, Inc. Quote
VGM Scores
At this time, PDCO has a subpar Growth Score of D, though it is lagging a bit on the momentum front with an F. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock and the magnitude of these revisions indicates a downward shift. It's no surprise PDCO has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.