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Earnings Estimates Moving Higher for Patterson Cos. (PDCO): Time to Buy?

Zacks Equity Research
·2-min read

Patterson Cos. (PDCO) could be a solid choice for investors given the company's remarkably improving earnings outlook. While the stock has been a strong performer lately, this trend might continue since analysts are still raising their earnings estimates for the company.

Analysts' growing optimism on the earnings prospects of this medical supplies maker is driving estimates higher, which should get reflected in its stock price. After all, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements. Our stock rating tool -- the Zacks Rank -- is principally built on this insight.

The five-grade Zacks Rank system, which ranges from a Zacks Rank #1 (Strong Buy) to a Zacks Rank #5 (Strong Sell), has an impressive externally-audited track record of outperformance, with Zacks #1 Ranked stocks generating an average annual return of +25% since 2008.

Consensus earnings estimates for the next quarter and full year have moved considerably higher for Patterson Cos. As there has been strong agreement among the covering analysts in raising estimates.

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The chart below shows the evolution of forward 12-month Zacks Consensus EPS estimate:

12 Month EPS

Current-Quarter Estimate Revisions

The company is expected to earn $0.18 per share for the current quarter, which represents a year-over-year change of -33.33%.

The Zacks Consensus Estimate for Patterson Cos. has increased 26.44% over the last 30 days, as two estimates have gone higher while one has gone lower.

Current-Year Estimate Revisions

The company is expected to earn $1.35 per share for the full year, which represents a change of -12.9% from the prior-year number.

In terms of estimate revisions, the trend for the current year also appears quite encouraging for Patterson Cos. Over the past month, seven estimates have moved higher compared to no negative revisions, helping the consensus estimate increase 18.5%.

Favorable Zacks Rank

Thanks to promising estimate revisions, Patterson Cos. currently carries a Zacks Rank #2 (Buy). The Zacks Rank is a tried-and-tested rating tool that helps investors effectively harness the power of earnings estimate revisions and make the right investment decision. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.

Our research shows that stocks with Zacks Rank #1 (Strong Buy) and 2 (Buy) significantly outperform the S&P 500.

Bottom Line

Patterson Cos. shares have added 6.3% over the past four weeks, suggesting that investors are betting on its impressive estimate revisions. So, you may consider adding it to your portfolio right away to benefit from its earnings growth prospects.


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Zacks Investment Research