Patterson Companies, Inc. Just Beat EPS By 15%: Here's What Analysts Think Will Happen Next
As you might know, Patterson Companies, Inc. (NASDAQ:PDCO) just kicked off its latest third-quarter results with some very strong numbers. Patterson Companies beat earnings, with revenues hitting US$1.6b, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 15%. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Patterson Companies after the latest results.
See our latest analysis for Patterson Companies
Taking into account the latest results, the current consensus from Patterson Companies' 15 analysts is for revenues of US$6.07b in 2022, which would reflect an okay 7.7% increase on its sales over the past 12 months. Patterson Companies is also expected to turn profitable, with statutory earnings of US$1.77 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$5.95b and earnings per share (EPS) of US$1.72 in 2022. So the consensus seems to have become somewhat more optimistic on Patterson Companies' earnings potential following these results.
The consensus price target was unchanged at US$32.23, implying that the improved earnings outlook is not expected to have a long term impact on value creation for shareholders. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Patterson Companies at US$40.00 per share, while the most bearish prices it at US$21.00. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Patterson Companies' rate of growth is expected to accelerate meaningfully, with the forecast 6.1% annualised revenue growth to the end of 2022 noticeably faster than its historical growth of 0.6% p.a. over the past five years. Compare this with other companies in the same industry, which are forecast to grow their revenue 7.1% annually. Patterson Companies is expected to grow at about the same rate as its industry, so it's not clear that we can draw any conclusions from its growth relative to competitors.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Patterson Companies' earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at US$32.23, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Patterson Companies. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Patterson Companies going out to 2025, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 2 warning signs for Patterson Companies you should be aware of, and 1 of them shouldn't be ignored.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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