Patterson Companies, Inc. (NASDAQ: PDCO) reported a fiscal 2017 first-quarter revenue that exceeded the analysts’ estimates. However, the share price still declined as the earnings only met the Wall Street estimates. Yet, considering the reaffirmation of the strong FY17 EPS guidance and the increase in the Q1 revenue and earnings compared to the prior year’s similar period, we are bullish on the stock. The shares of the dental and animal health product distributor closed at $46.35 on Monday.
The Mendota Heights-based company’s first-quarter revenue of $1.332 billion was higher than the Thomson Reuters estimates of $1.32 billion. During the first quarter of fiscal 2016, Patterson recorded revenue of $1.142 billion.
Patterson Dental segment’s net sales declined 3.5% y-o-y to $555 million. However, on a constant currency basis, the sales were 2.1% higher on a y-o-y. Patterson Animal Health segment’s net sales were $762.6 million, up 36.8% from the prior year. The Dental and Animal segment contributed to 43% and 57% of the total net sales of the company.
For the first quarter, the company posted net income from continuing operations of $38.91 million or $0.40 per share, compared to $20.31 million or $0.20 per share in the corresponding quarter of fiscal 2016. The Q1 2017 had no discontinued operations. On the other hand, Patterson reported Q1 2016 net income from discontinued operations of $9.392 million or $0.10 per share.
Excluding transaction-related costs, deal amortization, and business restructuring expenses, the company reported first-quarter net income from continuing operations of $48.79 million or $0.51 per share, up from $46.90 million or $0.47 per share in the first quarter last year. The adjusted earnings met the Zacks earnings estimate.
For fiscal 2017, Patterson reaffirmed the earnings per share outlook in the range of $2.60 to $2.70. The Zacks earnings estimate is currently $2.65 per share. During the first quarter, under the share repurchase program, the company bought back 0.5 million shares valued at $25 million. The company has 16 million shares yet to be repurchased under the current authorization program. Thus, considering the strong financial health of the company, we feel that the shares of Patterson would remain bullish in the weeks ahead.
The stock has bounced off the major support (S1) at 45. On the upside, considering the historic price chart, the resistance can be anticipated to arise at 52. The main line of the MACD indicator has crossed above the signal line. This indicates that the stock is turning bullish.
As such, a one-touch call option should be purchased by a binary trader to benefit from the probable uptrend. The strike price for the call option should be $52 or lower. Likewise, a four-week time period is preferred for the contract to reach the forecasted target.
Disclaimer: Any financial trading analysis offered here is our opinion and is not intended as advice or direction for investors. We cannot guarantee the success of any trades made as a consequence of this article, and we encourage traders to incorporate a strong money management strategy to limit losses when they enter the markets. Please use this article as part of your own research before formulating strategies prior to trading.
