Bullish stock to watch: Patterson Companies, Inc. (NASDAQ: PDCO)

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Patterson Companies, Inc. (NASDAQ: PDCO) stock rose over 6.6% on 25th June, 2020 (as of 12:49 pm GMT-4 ; Source: Google finance). PDCO in the fourth quarter of FY 20 has reported the adjusted earnings per share of 43 cents, beating the analysts’ estimates for the adjusted earnings per share of 18 cents, according to the FactSet consensus.

The company swung to a loss of $608.6 million in its fiscal fourth quarter to April 25, after earnings of $27.9 million in the year-earlier period. The company did not provide the guidance for fiscal 2021 due to the uncertainty stemming from the pandemic. The company had reported 10.5 percent fall in the adjusted revenue to $1.29 billion in the fourth quarter of FY 20, beating the analysts’ estimates for revenue of $1.24 billion. Internal sales which are adjusted for the effects of currency translation and changes in product selling relationships fell by 10% compared to the same period last year. The internal sales growth for Patterson Companies through the first two months of the fiscal quarter was 5.1%. The fourth quarter adjusted gross margin was 22.9%, which represents an expansion of 110 basis points versus the fourth quarter of fiscal 2019 on the back of improved product mix and higher vendor rebates earned at year end, that reflected the strong performance during the first 11 months of fiscal 2020. In the fourth quarter, the consolidated adjusted operating margin was 5.6%, which represents a 170 basis point expansion over the same period in the prior year.

Moreover, in the Dental segment, during the first two months of the fourth quarter, the internal sales were up 7.8%, due to the strong momentum in the business across all three categories-consumables, equipment and value-added services. In mid-March, the COVID-19 pandemic severely impacted the Dental business as the American Dental Association issued guidelines on March 16 for dentists to only perform emergency procedures, which affected the consumables and equipment sales volumes. As a result, fourth quarter internal sales for the Dental business fell 27.2% compared to the fourth quarter of fiscal 2019. On that same basis, Patterson’s sales of consumable dental supplies fell 26% and sales of equipment in the fourth quarter declined 36.4% versus the same period a year ago with similar percentage declines across all equipment categories. The internal sales for the Animal Health business declined only 0.8% for the full quarter compared to the same period a year ago.

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