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Patterson Companies (PDCO)
NASDAQ:PDCO
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Patterson Companies
(NASDAQ:PDCO)
Rating:70Outperform
Price Target:―
Positive Factors
Acquisition
The acquisition of Patterson Companies by Patient Square Capital for $31.35 per share represents a significant premium to recent trading prices, indicating investor confidence.
Valuation
The transaction valuation is slightly above Patterson Companies' five-year historical average valuations, indicating a favorable deal for shareholders.
Negative Factors
Earnings
Patterson reported weaker-than-expected results in its most recent quarter with adjusted EPS coming in well below estimates.
Market Demand
Concerns about near-term dental market demand raise questions about the valuation multiple paid in the transaction.
Patterson Companies (PDCO) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.77B
Dividend Yield2.49%
Average Volume (3M)2.05M
Price to Earnings (P/E)20.2
Beta (1Y)0.14
Revenue Growth-0.85%
EPS Growth-23.40%
CountryUS
Employees7,600
SectorHealthcare
Sector Strength41
IndustryMedical - Distribution
Share Statistics
EPS (TTM)1.55
Shares Outstanding88,474,000
10 Day Avg. Volume3,297,525
30 Day Avg. Volume2,048,295
Financial Highlights & Ratios
PEG Ratio-1.48
Price to Book (P/B)2.79
Price to Sales (P/S)0.42
P/FCF Ratio-3.18
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$31.25Price Target Upside-0.26% Downside
Rating ConsensusHold
Number of Analyst Covering3
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
Patterson Companies demonstrates stable gross profit margins and operational efficiency. The debt-to-equity ratio has improved, suggesting manageable leverage. However, the decline in net profit margin and negative operating cash flow indicate challenges in profitability and cash flow management.Income Statement
Patterson Companies shows a stable gross profit margin over the years, currently at 20.5% for TTM. However, the net profit margin has declined to 2.1% from 2.8% in the previous annual report. Revenue growth is minimal over the past years. EBIT and EBITDA margins are stable, indicating consistent operational efficiency despite the declining net income.70
Positive
Balance Sheet
The debt-to-equity ratio has slightly improved to 0.58 from 0.76, indicating manageable leverage. The equity ratio is around 35%, suggesting a balanced capital structure. However, return on equity (ROE) has decreased, reflecting a drop in profitability relative to equity.65
Positive
Cash Flow
Operating cash flow is negative, impacting free cash flow negatively. The free cash flow to net income ratio is concerning, indicating cash outflows are not being supported by income. However, the company has seen a reduction in free cash flow deficit over the years.55
Neutral
| Breakdown | |||||
| TTM | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 | Jun 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 6.51B | 6.57B | 6.47B | 6.50B | 5.91B | 5.49B | Gross Profit |
| 1.33B | 1.38B | 1.37B | 1.29B | 1.20B | 1.20B | EBIT |
| 200.23M | 252.92M | 275.97M | 157.00M | 210.61M | 126.44M | EBITDA |
| 323.25M | 374.76M | 386.14M | 367.17M | 301.75M | -476.90M | Net Income Common Stockholders |
| 138.78M | 185.93M | 207.56M | 203.21M | 155.98M | -589.37M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 328.74M | 114.46M | 159.67M | 142.01M | 143.24M | 77.94M | Total Assets |
| 2.55B | 2.90B | 2.88B | 2.74B | 2.75B | 2.72B | Total Debt |
| 525.00M | 762.94M | 628.00M | 590.23M | 721.87M | 668.33M | Net Debt |
| 196.26M | 648.48M | 468.33M | 448.22M | 578.62M | 590.38M | Total Liabilities |
| 1.05B | 1.90B | 1.76B | 1.70B | 1.79B | 1.88B | Stockholders Equity |
| 1.50B | 1.00B | 1.12B | 1.04B | 964.67M | 836.44M |
| Cash Flow | Free Cash Flow | ||||
| -867.45M | -857.00M | -819.07M | -1.02B | -756.31M | -285.35M | Operating Cash Flow |
| -804.60M | -789.38M | -754.85M | -980.99M | -730.52M | -243.54M | Investing Cash Flow |
| 1.00B | 959.54M | 901.57M | 1.24B | 810.66M | 499.13M | Financing Cash Flow |
| -184.85M | -215.91M | -126.48M | -253.23M | -22.64M | -271.23M |
Patterson Companies Technical Analysis
Positive
31.33
Price Trends
31.15
Positive
30.16
Positive
26.21
Positive
Market Momentum
0.06
Negative
58.18
Neutral
98.41
Negative
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 31.33 is above the 20-day moving average (MA) of 31.20, above the 50-day MA of 31.15, and above the 200-day MA of 26.21, indicating a bullish trend. The MACD of 0.06 indicates Negative momentum. The RSI at 58.18 is Neutral, neither overbought nor oversold. The STOCH value of 98.41 is Negative, 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 37 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 3 New Risks
1.
The proposed Merger is subject to approval of our shareholders as well as the satisfaction of other closing conditions, some or all of which may not be satisfied or completed within the expected timeframe, if at all. Q4, 2024
2.
We may not complete the proposed Merger within the timeframe we anticipate or at all, which could have an adverse effect on our stock price as well as our business, financial results and/or operations. Q4, 2024
3.
We will be subject to various business uncertainties while the Merger is pending that may cause disruption. Q4, 2024
Patterson Companies Peers Comparison
Overall Rating
UnderperformOutperform
Sector (53)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $8.72B | 22.27 | 11.78% | ― | 1.75% | 8.76% | |
72 Outperform | $89.59B | 27.84 | 51.23% | 0.38% | 16.22% | 15.29% | |
71 Outperform | $10.48B | 22.70 | 10.53% | 7.40% | 10.56% | 45.37% | |
70 Outperform | $2.77B | 20.21 | 14.15% | 2.49% | -0.85% | -23.40% | |
68 Neutral | $49.12B | 32.70 | 5.97% | 2.32% | 5.84% | 15.12% | |
68 Neutral | $36.46B | 23.85 | -43.80% | 1.32% | 0.78% | 183.45% | |
53 Neutral | $5.14B | 3.03 | -44.09% | 2.83% | 16.75% | -0.06% |
* Healthcare Sector Average
Performance Comparison
PDCO
Patterson Companies
31.33
7.88
33.60%
BDX
Becton Dickinson
171.38
-51.52
-23.11%
CAH
Cardinal Health
152.75
59.66
64.09%
HSIC
Henry Schein
71.65
0.50
0.70%
MCK
McKesson
716.09
169.35
30.97%
OHI
Omega Healthcare
36.20
7.19
24.78%
Patterson Companies Earnings Call Summary
Earnings Call Date:Feb 26, 2025
(Q2-2025)
| % Change Since: 0.84%|
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.Q2-2025 Updates
Positive Updates
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.
Negative Updates
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.Patterson Companies Corporate Events
Delistings and Listing ChangesExecutive/Board ChangesM&A Transactions
Patterson Companies Acquired by Patient Square Capital
Positive
Apr 22, 2025
On April 22, 2025, Patterson Companies announced the completion of its acquisition by Patient Square Capital, a healthcare investment firm, which resulted in the company’s stock no longer being traded on the NASDAQ Global Select Market. Concurrently, Robert Rajalingam was appointed as the new CEO, succeeding Don Zurbay, who will continue to support the company during the transition. Rajalingam, with over 25 years of healthcare management experience, is expected to drive operational excellence and strategic growth, enhancing Patterson’s offerings and partnerships.
Spark’s Take on PDCO Stock
According to Spark, TipRanks’ AI Analyst, PDCO is a Neutral.
Patterson Companies scores well due to its stable operational efficiency and strong market momentum. However, challenges with profitability and cash flow management slightly dampen its overall performance. The stock’s valuation is fair, and its dividend yield is a positive aspect for investors seeking income. Technical indicators suggest strong momentum, though caution is advised due to potential overbought conditions.
To see Spark’s full report on PDCO stock, click here.
Delistings and Listing ChangesExecutive/Board ChangesM&A Transactions
Patterson Companies Completes Major Merger and Restructuring
Neutral
Apr 17, 2025
Patterson Companies, Inc. has completed significant financial restructuring by repaying and terminating its existing credit and financing agreements as of the closing date. In a major corporate development, the company has undergone a merger, resulting in its common stock being delisted from Nasdaq and a reorganization of its board of directors, with several resignations and new appointments. The merger also led to amendments in the company’s articles of incorporation and bylaws.
Spark’s Take on PDCO Stock
According to Spark, TipRanks’ AI Analyst, PDCO is a Neutral.
Patterson Companies scores well due to its stable operational efficiency and strong market momentum. However, challenges with profitability and cash flow management slightly dampen its overall performance. The stock’s valuation is fair, and its dividend yield is a positive aspect for investors seeking income. Technical indicators suggest strong momentum, though caution is advised due to potential overbought conditions.
To see Spark’s full report on PDCO stock, click here.
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.