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What do the Patterson Companies (PDCO) fourth quarter results have in store for us? – June 16, 2022

Patterson Companies, Inc. (OFSP Free Report) is expected to release fourth quarter fiscal 2022 results in the final weeks of June, before the opening bell.

The company pulled off a 10% profit surprise in the latest reported quarter. Its earnings have topped the Zacks consensus estimate in three of the past four quarters and missed once, with the average surprise coming in at 2.7%.

Fourth quarter estimates

For the quarter to report, Zacks’ consensus estimate for the company’s revenue is set at $1.61 billion, suggesting growth of 3.2% from the figure reported a year ago. The same for adjusted earnings per share (EPS) came in at 56 cents, indicating a 47.4% increase from the year-ago quarter.

Factors to note

As a leading distributor of dental consumables and technology, the dental arm of the Patterson Companies has been a major contributor to its revenue. However, it should be mentioned that the resurgence of COVID-19 may have impacted the company’s dental business in the fourth quarter of fiscal 2022.

According to management, in the third quarter of fiscal 2022, sales in this segment increased slightly by 0.3% year over year. Across the dental segment, the company’s sales, service and field support teams remain committed to delivering value to its customers and business partners, driving strong operational excellence. This trend likely continued in the quarter ahead.

In the Animal Health business in the third fiscal quarter of 2022, sales in this segment increased 5.6% year-over-year. According to management, this is due to strong internal sales growth and increased internal sales in the companion animal business as well as in the production animal business.

The segment benefited from the rise in pet adoptions and increased attention to companion animals. According to the third quarter fiscal 2022 earnings call, the companion animal business continues to show signs of prosperity and is poised to benefit from long-term tailwinds from increased ownership pets over the past two years. Consequently, this trend should be reflected in the results of the fourth fiscal quarter.

Apart from this, the company believes that the Animal Health business is well positioned to drive revenue and therefore margins in the near term.

Strong demand for segment products such as x-ray films, restorative materials, sterilization products, hand instruments and advanced dental equipment may have contributed to the company’s performance in the reporting quarter.

However, intense competition across most product lines may have weighed on the company’s overall performance in the fourth fiscal quarter.

What the Zacks Model Reveals

According to our proven model, the combination of a positive earnings ESP and a Zacks rank of #1 (strong buy), 2 (buy), or 3 (hold) increases the odds of beating earnings. This is not the case here, as you will see.

ESP Earnings: Patterson Companies has an ESP on earnings of 0.00%. You can discover the best stocks to buy or sell before they’re flagged with our earnings ESP filter.

Zacks Rank: The company currently has a #3 Zacks rank.

Peer publications

Some top-ranked stocks in the broader medical field that have announced quarterly results are Bio-Rad Laboratories, Inc. (organic free report), AMN Healthcare Services, Inc. (AMN free report) and Masimo Company (BUT free report).

Bio-Rad, carrying a No. 2 Zacks rank, reported adjusted EPS of $4.94 in the first quarter of 2022, which beat the Zacks consensus estimate of 76.4%. Revenue of $700 million topped the consensus mark of 3.3%. You can see the full list of today’s Zacks #1 Rank stocks here.

Bio-Rad has a historic earnings growth rate of 31.2%. BIO’s earnings have exceeded estimates in each of the past four quarters, with the average surprise being 58.9%.

AMN Healthcare, sporting a Zacks No. 1 ranking, reported adjusted EPS of $3.49 in the first quarter of 2022, which beat the Zacks consensus estimate by 7.4%. Revenue of $1.55 billion topped the consensus mark of 3.7%.

AMN Healthcare has an estimated long-term growth rate of 1.1%. AMN’s earnings have exceeded estimates for the past four quarters, with the average surprise being 15.6%.

Masimo reported first-quarter 2022 adjusted EPS of 93 cents, which beat Zacks’ consensus estimate of 1.1%. Revenue of $304.2 million beat Zacks’ consensus estimate by 3.6%. He currently wears a No. 2 Zacks rank.

Masimo has an earnings return of 3.4% compared to negative industry return. MASI’s earnings have exceeded estimates in each of the past four quarters, with the average surprise being 4.4%.

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