Patterson Companies Faces Multiple Issues: Dump Now?
Zacks Investment Research | Sep 25, 2016 09:02PM ET
On Sep 23, we issued an updated research report on St. Paul, MN-based The Patterson Companies (NASDAQ:PDCO) , a leading distributor serving the dental, companion-pet veterinarian and rehabilitation supply markets. The company currently carries a Zacks Rank #4 (Sell).
Patterson Companies witnessed low dental consumable sales in the first quarter of 2017, down 7% year over year. In fact, a dismal performance by the Dental business segment (deteriorating 3.5% year over year) caused a major drag on overall results.
The cutthroat competitive scenario in the U.S. dental products distribution industry is also a major dampener. Notably, Patterson Companies faces serious competition from at least 15 full-service distributors (that include Henry Schein (NASDAQ:HSIC) Dental, a unit of Henry Schein) and hundreds of small and local distributors. The company will also face challenges from the disruption caused by its sales force realignment initiative in the first quarter. High operating expenses have also been a major drag on margins.
Owing to the above-mentioned factors, the Zacks Consensus Estimate for full-year 2017 earnings dropped by a penny to $2.64 per share, as four out of the five analysts revised their estimates downward over the last 30 days.
However, on the brighter side, we are particularly upbeat about the growth prospects of the company’s Animal Health segment. The company also witnessed strong improvement in the swine end-markets and the beef cattle market.
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