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Patterson Companies Inc (PDCO)
NASDAQ:PDCO
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Patterson Companies
(NASDAQ:PDCO)70Outperform
Positive Factors
Acquisition
Patterson Companies has agreed to sell itself to Patient Square Capital for $31.35 per share in an all-cash transaction, representing a ~35% premium to the previous closing price.
Valuation
The announced acquisition by Patient Square Capital values PDCO at a significant premium, indicating the company's underappreciated value.
Negative Factors
Market Dynamics
Concerns about near-term dental market demand raise questions about the valuation multiple paid in the transaction.
Patterson Companies (PDCO) vs. S&P 500 (SPY)
Market Cap
$2.76B
Dividend Yield3.34%
Average Volume (3M)1.19M
Price to Earnings (P/E)20.1
Beta (1Y)0.21
Revenue Growth-0.85%
EPS Growth-23.40%
CountryUS
Employees7,600
SectorHealthcare
Sector Strength74
IndustryMedical Distributors
Share Statistics
EPS (TTM)1.55
Shares Outstanding88,473,850
10 Day Avg. Volume1,370,551
30 Day Avg. Volume1,188,373
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)0.42
Price to Cash Flow (P/CF)-2.50
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$30.06Price Target Upside-3.44% Downside
Rating ConsensusHold
Number of Analyst Covering9
Patterson Companies Business Overview & Revenue Model
Company DescriptionPatterson Companies, Inc. is a leading distributor in the healthcare sector, focusing on providing a comprehensive range of products and services to the dental and animal health markets. The company operates through two primary segments: Dental and Animal Health. Its offerings include dental consumables, equipment, and software, as well as veterinary supplies and diagnostic products, catering to a broad spectrum of healthcare providers.
How the Company Makes MoneyPatterson Companies generates revenue primarily through the sale of dental and animal health products. In the dental segment, revenue is derived from the sale of consumables, equipment, and technology solutions to dental practices and laboratories. The animal health segment contributes to revenue through the distribution of pharmaceuticals, vaccines, diagnostics, and other health products for both companion and production animals. Patterson Companies also earns income from providing value-added services such as equipment installation, maintenance, and repair, as well as offering software solutions that enhance practice management for healthcare providers. Strategic partnerships with manufacturers and ongoing relationships with healthcare providers further bolster Patterson's revenue streams by ensuring a steady supply of products and fostering customer loyalty.
Patterson Companies Financial Statement Overview
Summary
The financial performance of Patterson Companies shows a stable revenue base but declining net income and negative cash flows, posing significant risks. The balance sheet is moderately leveraged, yet increasing liabilities could impact financial flexibility. The company needs to improve operational efficiency and cash flow management.Income Statement
The income statement shows a stable revenue base but with a declining net income over the TTM. Gross profit margin stands at approximately 20.8%, and the net profit margin is around 2.4%, indicating moderate profitability. However, the revenue growth is stagnant, and there is a slight decline in EBIT over the recent periods, which poses a risk to future profitability.65
Positive
Balance Sheet
The balance sheet is relatively stable with a debt-to-equity ratio of 0.60, indicating moderate leverage. The equity ratio is about 33.8%, showing a healthy level of equity financing. However, there is a noticeable increase in total liabilities over time, which could impact future financial flexibility.70
Positive
Cash Flow
Cash flow metrics are concerning, with negative operating cash flow and free cash flow in the TTM, which suggests cash flow management issues. The free cash flow growth rate is negative, and the operating cash flow to net income ratio is unfavorable, indicating potential liquidity risk that needs addressing.45
Neutral
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 6.55B | 6.57B | 6.47B | 6.50B | 5.91B | 5.49B | Gross Profit |
| 1.36B | 1.38B | 1.37B | 1.29B | 1.20B | 1.20B | EBIT |
| 227.91M | 252.92M | 275.97M | 157.00M | 210.61M | 126.44M | EBITDA |
| 342.20M | 374.76M | 386.14M | 367.17M | 301.75M | -476.90M | Net Income Common Stockholders |
| 155.22M | 185.93M | 207.56M | 203.21M | 155.98M | -589.37M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 114.46M | 114.46M | 159.67M | 142.01M | 143.24M | 77.94M | Total Assets |
| 2.90B | 2.90B | 2.88B | 2.74B | 2.75B | 2.72B | Total Debt |
| 762.94M | 762.94M | 628.00M | 590.23M | 721.87M | 668.33M | Net Debt |
| 648.48M | 648.48M | 468.33M | 448.22M | 578.62M | 590.38M | Total Liabilities |
| 1.90B | 1.90B | 1.76B | 1.70B | 1.79B | 1.88B | Stockholders Equity |
| 1.00B | 1.00B | 1.12B | 1.04B | 964.67M | 836.44M |
| Cash Flow | Free Cash Flow | ||||
| -823.13M | -857.00M | -819.07M | -1.02B | -756.31M | -285.35M | Operating Cash Flow |
| -762.78M | -789.38M | -754.85M | -980.99M | -730.52M | -243.54M | Investing Cash Flow |
| 1.05B | 959.54M | 901.57M | 1.24B | 810.66M | 499.13M | Financing Cash Flow |
| -251.59M | -215.91M | -126.48M | -253.23M | -22.64M | -271.23M |
Patterson Companies Technical Analysis
Positive
31.13
Price Trends
30.96
Positive
26.52
Positive
24.88
Positive
Market Momentum
0.18
Positive
76.41
Negative
66.67
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PDCO, the sentiment is Positive. The current price of 31.13 is above the 20-day moving average (MA) of 31.06, above the 50-day MA of 30.96, and above the 200-day MA of 24.88, indicating a bullish trend. The MACD of 0.18 indicates Positive momentum. The RSI at 76.41 is Negative, neither overbought nor oversold. The STOCH value of 66.67 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for PDCO.
Patterson Companies Risk Analysis
Patterson Companies disclosed 31 risk factors in its most recent earnings report. Patterson Companies reported the most risks in the “Ability to Sell” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Patterson Companies Peers Comparison
Overall Rating
UnderperformOutperform
Sector (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $80.67B | 29.50 | 51.23% | 0.41% | 14.29% | -1.20% | |
76 Outperform | $10.38B | 24.52 | 8.96% | 7.27% | 9.90% | 56.41% | |
73 Outperform | $65.60B | 37.95 | 6.85% | 1.70% | 5.89% | 42.05% | |
70 Outperform | $2.76B | 20.08 | 14.02% | 3.34% | -0.85% | -23.40% | |
66 Neutral | $8.96B | 23.20 | 11.49% | ― | 2.71% | -3.26% | |
60 Neutral | $31.28B | 24.17 | -43.80% | 1.56% | 2.85% | 110.82% | |
49 Neutral | $7.05B | 0.34 | -55.09% | 2.46% | 25.27% | -3.43% |
* Healthcare Sector Average
Performance Comparison
PDCO
Patterson Companies
31.13
5.23
20.19%
BDX
Becton Dickinson
224.27
-5.28
-2.30%
CAH
Cardinal Health
126.31
15.46
13.95%
HSIC
Henry Schein
70.31
-5.10
-6.76%
MCK
McKesson
643.69
117.29
22.28%
OHI
Omega Healthcare
37.38
8.68
30.24%
Patterson Companies Earnings Call Summary
Earnings Call Date: Feb 26, 2025 | % Change Since: 0.19% | Next Earnings Date: Jun 25, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture with positive developments in the Animal Health segment and strategic acquisitions, alongside significant challenges in the Dental segment and impacts from a cybersecurity attack. The company's efforts in cost management and strategic investments are overshadowed by the need to revise fiscal guidance due to ongoing market pressures.Highlights
Animal Health Segment Growth
Internal sales for the fiscal second quarter increased approximately 2% year-over-year, driven by mid-single-digit growth in the production animal business.
Strategic Acquisitions in Animal Health
Patterson announced two acquisition agreements: Infusion Concepts and Mountain Vet Supply, strengthening their position in the companion and production animal markets.
Cost Management Actions
Patterson implemented dedicated cost management actions, expecting to generate annual cost savings of approximately $16 million.
Investment in Software and Services
Investments were made in new features for Fuse, Eaglesoft, and Dolphin to enhance dental practice efficiency.
Lowlights
Dental Equipment Sales Decline
Internal sales in Dental Equipment decreased approximately 8% year-over-year, with notable declines in digital equipment and CAD/CAM categories.
Impact of Change Healthcare Cybersecurity Attack
The cybersecurity attack led to a decline in internal sales in the dental value-added services category by nearly 3%.
Revised Fiscal 2025 Guidance
Guidance was revised due to expected persistent pressures across the dental industry, with GAAP earnings guidance adjusted to $1.83 to $1.93 per diluted share.
Decreased Gross Margin
The GAAP gross margin for the second quarter was 19.6%, a decrease of 90 basis points compared to the prior year period.
Company Guidance
During the Patterson Companies Q2 2025 earnings call, the company revised its fiscal 2025 guidance, reflecting adjusted expectations across its end markets. The revised guidance anticipates adjusted earnings per share (EPS) in the range of $2.25 to $2.35, down from earlier projections, with a focus on managing pressures in the dental industry. Factors influencing this guidance include a 1% year-over-year increase in internal sales, driven by the Animal Health segment, while dental equipment sales faced an 8% decline. The company also reported $16 million in expected annual cost savings from organizational realignment. With these adjustments, Patterson aims to drive revenue growth, enhance margin performance, and continue investing in strategic growth opportunities despite ongoing macroeconomic challenges.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.