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PDCO

Patterson Companies NasdaqGS:PDCO Stock Report

Last Price

US$30.94

Market Cap

US$3.0b

7D

2.6%

1Y

4.0%

Updated

11 Aug, 2022

Data

Company Financials +
PDCO fundamental analysis
Snowflake Score
Valuation5/6
Future Growth1/6
Past Performance3/6
Financial Health5/6
Dividends4/6

PDCO Stock Overview

Patterson Companies, Inc. engages in distribution of dental and animal health products in the United States, the United Kingdom, and Canada.

Patterson Companies Competitors

Price History & Performance

Summary of all time highs, changes and price drops for Patterson Companies
Historical stock prices
Current Share PriceUS$30.94
52 Week HighUS$35.29
52 Week LowUS$26.51
Beta1.24
1 Month Change4.18%
3 Month Change-0.13%
1 Year Change4.04%
3 Year Change85.83%
5 Year Change-15.83%
Change since IPO1,468.79%

Recent News & Updates

Aug 05
An Intrinsic Calculation For Patterson Companies, Inc. (NASDAQ:PDCO) Suggests It's 30% Undervalued

An Intrinsic Calculation For Patterson Companies, Inc. (NASDAQ:PDCO) Suggests It's 30% Undervalued

In this article we are going to estimate the intrinsic value of Patterson Companies, Inc. ( NASDAQ:PDCO ) by taking the...

Jul 20
Here's Why We Think Patterson Companies (NASDAQ:PDCO) Might Deserve Your Attention Today

Here's Why We Think Patterson Companies (NASDAQ:PDCO) Might Deserve Your Attention Today

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story...

Jul 07

Patterson Companies: Defying The Industry-Wide Pessimism

Patterson outperforms against the odds in its latest quarter. While sentiment remains downbeat, the resilience in dental and animal health offer reasons to be optimistic. The raised guidance still incorporates conservative assumptions, leaving ample room for more beats and raises down the line. Patterson Companies, Inc.'s (PDCO) recent guidance update came in better than expected, as revenue growth and margin numbers across both segments (dental and animal health) surprised to the upside. Most impressively, PDCO's pricing power is holding firm through the macro doom and gloom, supporting growth across both segments as well as 10-30bps of margin expansion. The only real blemish from the quarter was the more back-half weighted EPS, which could leave guidance numbers vulnerable should we see a demand slowdown amid worsening economic conditions. Still, expectations are low, particularly with the elevated recession risk and inflationary pressures still top of mind. Plus, the stock trades at a discounted valuation relative to the closest peer Henry Schein (HSIC) and historical levels, skewing the risk/reward favorably. Data by YCharts Bright Spots Emerging in Dental Equipment On an internal basis, dental consumables sales offered little cheer this quarter, declining ~0.8% YoY amid a ~19% decline in infection control products. While demand has stabilized here, pricing has yet to recover since declining from the pandemic high. On the other hand, non-infection control consumable product sales picked up the slack at +2.9% YoY in 4Q22 on resilient traffic and customer relationships. Internal sales of dental equipment also rose strongly at +14.3% YoY, driven by double-digit growth in computer-aided manufacturing/design as well as low-single-digit growth in core equipment. On balance, this was a good outcome for the dental business, given the latest monthly American Dental Association ((ADA)) survey had practitioners' schedules at ~86% capacity in May and June (vs. ~87% in April and ~88% in March). ADA Health Policy Institute Monthly Report Even if core equipment continues to be weighed down by supply chain disruptions into 2022/2023, PDCO has a robust backlog of previously purchased (but pending installation) equipment. Plus, management cited no order cancellations - a key positive given the current macroeconomic challenges. PDCO should also be able to lean on its pricing power to pass on any cost pressures, particularly in dental consumables, where the company has successfully taken +4-5% of pricing. Maintaining this pricing power will be key, as the latest monthly ADA survey also indicates practitioners are increasingly concerned about the economy - the proportion of respondents "very" or "somewhat" confident the U.S. economy would recover in the next six months now stands at ~16% (vs. ~29% in April and ~28% in March). ADA Health Policy Institute Monthly Report Animal Health Still Has Bite Despite fears of a post-COVID slowdown, the animal health segment again posted solid revenue growth numbers - internal sales growth of ~8% for the quarter comprised ~5% companion animal growth and ~11% in the production animal sub-segment. As expected, vet clinic traffic has moderated as the company cycles the strong YoY growth seen during the pandemic, in addition to labor constraints at the clinic level. That said, on a two-year stack, sales are still up significantly, and perhaps, more importantly, spending per visit has also increased - a nod to PDCO's pricing power in the face of inflationary headwinds. Going forward, collaboration efforts with strategic vendor partners as well as its omnichannel buildout could see PDCO continue to outpace the broader market, in my view, given it expands the opportunity set across channels. Other key growth areas include the companion animal equipment and private label categories, both of which sustained double-digit YoY growth through the latest quarter. Patterson Companies Initial FY23 Guidance Numbers Point to a Resilient Fundamental Outlook Building on the 4Q22 EPS upside, the robust performances across the animal health and dental segments look set to continue into FY23. Not only did the updated adj EPS guidance exceed consensus numbers, but it also incorporated conservatism to account for a potential recession and inflationary headwinds, as well as a post-COVID normalization in animal health. The positive low-single-digit % volume growth, for instance, adjusts for above-trend price inflation and a PPE (i.e., gloves) headwind of ~200bps in dental. Putting it together, PDCO's FY23 EPS guidance bridge implies a slowdown in adj earnings growth. Thus, this outlook embeds ample buffer against any adverse shifts in end-market trends, clearing the path for more beats and raises in future earnings reports.

Shareholder Returns

PDCOUS HealthcareUS Market
7D2.6%1.0%1.2%
1Y4.0%15.8%-11.6%

Return vs Industry: PDCO underperformed the US Healthcare industry which returned 15.8% over the past year.

Return vs Market: PDCO exceeded the US Market which returned -11.6% over the past year.

Price Volatility

Is PDCO's price volatile compared to industry and market?
PDCO volatility
PDCO Average Weekly Movement4.6%
Healthcare Industry Average Movement8.9%
Market Average Movement7.9%
10% most volatile stocks in US Market17.0%
10% least volatile stocks in US Market3.2%

Stable Share Price: PDCO is less volatile than 75% of US stocks over the past 3 months, typically moving +/- 5% a week.

Volatility Over Time: PDCO's weekly volatility (5%) has been stable over the past year.

About the Company

FoundedEmployeesCEOWebsite
18777,700Mark Walchirkhttps://www.pattersoncompanies.com

Patterson Companies, Inc. engages in distribution of dental and animal health products in the United States, the United Kingdom, and Canada. The company operates through three segments: Dental, Animal Health, and Corporate segments. The Dental segment offers consumable products, including infection control, restorative materials, and instruments; basic and advanced technology and dental equipment; practice optimization solutions, such as practice management software, e-commerce, revenue cycle management, patient engagement solutions, and clinical and patient education systems.

Patterson Companies Fundamentals Summary

How do Patterson Companies's earnings and revenue compare to its market cap?
PDCO fundamental statistics
Market CapUS$3.01b
Earnings (TTM)US$203.21m
Revenue (TTM)US$6.50b

14.8x

P/E Ratio

0.5x

P/S Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
PDCO income statement (TTM)
RevenueUS$6.50b
Cost of RevenueUS$5.21b
Gross ProfitUS$1.29b
Other ExpensesUS$1.09b
EarningsUS$203.21m

Last Reported Earnings

Apr 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)2.09
Gross Margin19.83%
Net Profit Margin3.13%
Debt/Equity Ratio50.6%

How did PDCO perform over the long term?

See historical performance and comparison

Dividends

3.4%

Current Dividend Yield

50%

Payout Ratio
We’ve recently updated our valuation analysis.

Valuation

Is PDCO undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

  • Price-To-Earnings vs Peers

  • Price-To-Earnings vs Industry

  • Price-To-Earnings vs Fair Ratio

  • Below Fair Value

  • Significantly Below Fair Value

  • Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for PDCO?

Other financial metrics that can be useful for relative valuation.

PDCO key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue0.5x
Enterprise Value/EBITDA12.5x
PEG Ratio3.6x

Price to Earnings Ratio vs Peers

How does PDCO's PE Ratio compare to its peers?

PDCO PE Ratio vs Peers
The above table shows the PE ratio for PDCO vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPEEstimated GrowthMarket Cap
Peer Average18.7x
OMI Owens & Minor
17.1x21.2%US$2.6b
HSIC Henry Schein
15.9x6.3%US$10.3b
AHCO AdaptHealth
24.9x22.2%US$3.2b
ABC AmerisourceBergen
16.7x8.3%US$30.2b
PDCO Patterson Companies
14.7x4.2%US$3.0b

Price-To-Earnings vs Peers: PDCO is good value based on its Price-To-Earnings Ratio (14.8x) compared to the peer average (18.7x).


Price to Earnings Ratio vs Industry

How does PDCO's PE Ratio compare vs other companies in the US Healthcare Industry?

Price-To-Earnings vs Industry: PDCO is good value based on its Price-To-Earnings Ratio (14.8x) compared to the US Healthcare industry average (19.5x)


Price to Earnings Ratio vs Fair Ratio

What is PDCO's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

PDCO PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio14.8x
Fair PE Ratio21.3x

Price-To-Earnings vs Fair Ratio: PDCO is good value based on its Price-To-Earnings Ratio (14.8x) compared to the estimated Fair Price-To-Earnings Ratio (21.3x).


Share Price vs Fair Value

What is the Fair Price of PDCO when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: PDCO ($30.94) is trading below our estimate of fair value ($42.99)

Significantly Below Fair Value: PDCO is trading below fair value by more than 20%.


Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is less than 20% higher than the current share price.


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Future Growth

How is Patterson Companies forecast to perform in the next 1 to 3 years based on estimates from 12 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


4.2%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: PDCO's forecast earnings growth (4.2% per year) is above the savings rate (1.9%).

Earnings vs Market: PDCO's earnings (4.2% per year) are forecast to grow slower than the US market (14.5% per year).

High Growth Earnings: PDCO's earnings are forecast to grow, but not significantly.

Revenue vs Market: PDCO's revenue (2.8% per year) is forecast to grow slower than the US market (8% per year).

High Growth Revenue: PDCO's revenue (2.8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: PDCO's Return on Equity is forecast to be low in 3 years time (17.9%).


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Past Performance

How has Patterson Companies performed over the past 5 years?

Past Performance Score

3/6

Past Performance Score 3/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-22.7%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: PDCO has a high level of non-cash earnings.

Growing Profit Margin: PDCO's current net profit margins (3.1%) are higher than last year (2.6%).


Past Earnings Growth Analysis

Earnings Trend: PDCO's earnings have declined by 22.7% per year over the past 5 years.

Accelerating Growth: PDCO's earnings growth over the past year (29.8%) exceeds its 5-year average (-22.7% per year).

Earnings vs Industry: PDCO earnings growth over the past year (29.8%) exceeded the Healthcare industry 8.1%.


Return on Equity

High ROE: PDCO's Return on Equity (19.3%) is considered low.


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Financial Health

How is Patterson Companies's financial position?

Financial Health Score

5/6

Financial Health Score 5/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • Debt Coverage

  • Interest Coverage

Financial Position Analysis

Short Term Liabilities: PDCO's short term assets ($1.7B) exceed its short term liabilities ($1.0B).

Long Term Liabilities: PDCO's short term assets ($1.7B) exceed its long term liabilities ($683.3M).


Debt to Equity History and Analysis

Debt Level: PDCO's net debt to equity ratio (36.6%) is considered satisfactory.

Reducing Debt: PDCO's debt to equity ratio has reduced from 77.1% to 50.6% over the past 5 years.

Debt Coverage: PDCO's operating cash flow is negative, therefore debt is not well covered.

Interest Coverage: PDCO earns more interest than it pays, so coverage of interest payments is not a concern.


Balance Sheet


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Dividend

What is Patterson Companies's current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage


3.36%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: PDCO's dividend (3.36%) is higher than the bottom 25% of dividend payers in the US market (1.5%).

High Dividend: PDCO's dividend (3.36%) is low compared to the top 25% of dividend payers in the US market (4.05%).


Stability and Growth of Payments

Stable Dividend: PDCO's dividends per share have been stable in the past 10 years.

Growing Dividend: PDCO's dividend payments have increased over the past 10 years.


Earnings Payout to Shareholders

Earnings Coverage: With its reasonably low payout ratio (49.8%), PDCO's dividend payments are well covered by earnings.


Cash Payout to Shareholders

Cash Flow Coverage: PDCO is paying a dividend but the company has no free cash flows.


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Management

How experienced are the management team and are they aligned to shareholders interests?

4.5yrs

Average management tenure


CEO

Mark Walchirk (56 yo)

4.75yrs

Tenure

US$4,757,845

Compensation

Mr. Mark S. Walchirk has been the Chief Executive Officer and President of Patterson Companies, Inc. since November 20, 2017. Mr. Walchirk served as the President of U.S. Pharmaceutical at McKesson Corpora...


CEO Compensation Analysis

Compensation vs Market: Mark's total compensation ($USD4.76M) is about average for companies of similar size in the US market ($USD6.58M).

Compensation vs Earnings: Mark's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: PDCO's management team is considered experienced (4.5 years average tenure).


Board Members

Experienced Board: PDCO's board of directors are considered experienced (6.9 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Patterson Companies, Inc.'s employee growth, exchange listings and data sources


Key Information

  • Name: Patterson Companies, Inc.
  • Ticker: PDCO
  • Exchange: NasdaqGS
  • Founded: 1877
  • Industry: Health Care Distributors
  • Sector: Healthcare
  • Implied Market Cap: US$3.012b
  • Shares outstanding: 97.34m
  • Website: https://www.pattersoncompanies.com

Number of Employees


Location

  • Patterson Companies, Inc.
  • 1031 Mendota Heights Road
  • Saint Paul
  • Minnesota
  • 55120
  • United States

Listings


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/08/11 00:00
End of Day Share Price2022/08/11 00:00
Earnings2022/04/30
Annual Earnings2022/04/30


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.