Yahoo Finance Patterson Companies (PDCO) Q2 Earnings Beat, Sales Hurt by FX
Patterson Companies, Inc. PDCO reported adjusted earnings per share (EPS) of 63 cents for second-quarter fiscal 2023, beating the Zacks Consensus Estimate of 57 cents by 10.5%. The bottom line increased 8.6% from the prior-year quarter.
GAAP EPS in the quarter was 55 cents, up 12.2% from the prior-year quarter.
Revenue Details
Net sales in the quarter were $1.63 billion, which lagged the Zacks Consensus Estimate by 3%. The top line decreased 1.4% year over year. However, internal sales, adjusted for the effects of currency translation, were up 0.7% from the prior-year quarter.
Segmental Analysis
The company currently distributes products through 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 fiscal second quarter, dental sales increased 1.1% year over year to $628.9 million.
Patterson Companies, Inc. Price, Consensus and EPS Surprise
Patterson Companies, Inc. price-consensus-eps-surprise-chart | Patterson Companies, Inc. Quote
Dental Consumable
Sales in the sub-segment totaled $337.5 million, down 5.4% year over year.
Dental Equipment & Software
Sales in the segment gained 10.6% on a year-over-year basis to $214 million.
Value-added Services and Other
This segment comprises technical service, parts and labor, software support services and office supplies. Sales at the segment improved 7.4% on a year-over-year basis to $77.4 million.
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 second quarter, segment sales decreased 2.4% on a year-over-year basis to $1 billion.
Corporate
The segment recorded negative revenues of $5.7 million compared with negative revenues of $0.5 million in the year-ago quarter.
Margin Analysis
Gross profit in the reported quarter was $328.1 million, up 0.5% year over year. As a percentage of revenues, the gross margin of 20.2% expanded approximately 40 basis points (bps) on a year-over-year basis.
Operating expenses in the reported quarter amounted to $268 million, up 1.7% from the prior-year quarter.
The company reported an operating income of $60.1 million, down 4.4% from the year-ago quarter.
Financial Position
The company exited the fiscal second quarter with cash and cash equivalents of $140.3 million, compared with $149.6 million on a sequential basis.
Cumulative net cash used in operating activities at the end of the fiscal second quarter was $520.2 million compared with the year-ago quarter’s net cash utilized in operating activities of $539 million.
Fiscal 2023 Earnings Outlook
Patterson Companies maintained its earnings outlook for fiscal 2023. The company projects adjusted EPS in the range of $2.25 to $2.35. The Zacks Consensus Estimate for the same is pegged at $2.27 per share.
Our Take
Patterson Companies ended second-quarter fiscal 2023 on a mixed note, wherein earnings beat the consensus mark but revenues missed the same. The company’s Dental segment reflected improvements while the Animal Health segment’s sales continued to decline in the quarter under review. Sales of both segments were hurt by unfavorable currency movement. A prudent cost-savings approach and solid sales execution worked in favor of the company, expanding gross margin. Sustained momentum in the Animal Health business bodes well.
A broad spectrum of products cushions the company against economic downturns in the MedTech space. We believe that a diverse product portfolio, strong veterinary business prospects, accretive acquisitions and strategic partnerships are key catalysts.
Zacks Rank and Stocks to Consider
Patterson Companies currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Elevance Health, Inc. ELV, Medpace Holdings, Inc. MEDP and Merit Medical Systems, Inc. MMSI.
Elevance Health, carrying a Zacks Rank #2 (Buy), reported third-quarter 2022 adjusted EPS of $7.53, which beat the Zacks Consensus Estimate by 6.1%. Revenues of $39.63 billion outpaced the consensus mark by 1.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Elevance Health has an earnings yield of 5.5% against the industry’s (2.3%). ELV’s earnings surpassed estimates in all the trailing four quarters, the average being 4.1%.
Medpace Holdings, having a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of $2.05, which beat the Zacks Consensus Estimate by 39.5%. Revenues of $384 million outpaced the consensus mark by 8.1%.
Medpace Holdings has an estimated growth rate of 22.7% for 2022. MEDP’s earnings surpassed estimates in the trailing four quarters, the average being 22.04%.
Merit Medical, flaunting a Zacks Rank #1, reported third-quarter 2022 adjusted EPS of 64 cents, which beat the Zacks Consensus Estimate by 20.8%. Revenues of $287.2 million outpaced the consensus mark by 5.2%.
Merit Medical has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average being 25.4%.
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Patterson Companies, Inc. (PDCO) : Free Stock Analysis Report
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