The Odds of Success for Patterson Companies, Inc. (PDCO)

Patterson Companies, Inc. (NASDAQ:PDCO) recently claimed $2.12B as the price has approached $23.09. There came a -6.02% decline with the closing bell on Thursday. The stock remained range bound between $22.83 and $26.37. Trading activity significantly improved as the volume at ready counter increased to 4,748,456 shares versus 1,783,965 in average daily trading volume over the past 20 days. So far this year, the volume has averaged about 2,146,097 shares. The stock is now 14.19% above against its bear-market low of $20.22 on August 30, 2018. It has retreated -66.83% since it’s 52-week high of $38.52 reached in January. Now the market price is down -36.43% on the year and down -36.09% YTD.

PDCO’s 50 day simple moving average (SMA 50) price is $24.11 and its 200-day simple moving average (SMA 200) price is $23.62. The company’s stock currently has a total float of 82.57M shares. Its weekly volatility is hovering around 6.3% and felt 4.46% volatility in price over a month. On the upside, the share price will test short term resistance at around $25.36. On a downside, the stock is likely to find some support, which begins at $21.82. The failure to get near-term support could push it to $20.56.

Separately, it has been reported that multiple insider activity took place at Patterson Companies, Inc. (PDCO). Executive Vice President & CFO Gugino Ann B sold 750 shares for $41,964 in transaction occurred on 2018/01/11. After making this transaction, the Executive Vice President & CFO owns a direct stake of 27,285 shares, worth $968,949, as per the last closing price. On 2017/11/24 Buck John D, Director at PDCO, purchased 2,834 shares at an average price of $34.93 per share. The new stake is valued at $1,261,337.

Executive Vice President & CFO, Gugino Ann B had divested 750 shares for $39,034 through a trade on 2017/10/11. Following this activity, the insider holds 27,548 shares worth $901,295 as of recent close. Wall Street’s most bullish Patterson Companies, Inc. (NASDAQ:PDCO) analysts are predicting the share price to blow past $29 per share during the next 12 months. The current median share price forecast by them is $21, suggesting that the stock could increase -9.05% in that time frame. The average price target of $22.5 calls for a nearly -2.56% increase in the stock price.

It had seen a new analyst call from Goldman, which initiated the stock at Sell on October 19. Analysts at Leerink Partners, started covering the stock on August 10 with a Mkt Perform rating. Brokerage firm Stifel, looks cautious as they stick to prior recommendation of Hold, in a call on June 18. However, they did change the target price from $28 to $23. Barclays, released new analyst coverage on March 08, calling the stock is Underweight.

When looking at valuations, Patterson Companies, Inc. (PDCO) has a cheap P/E of 24.1x as compared to industry average of 30.69x. Moreover, it trades for 14.78 times the next 12 months of expected earnings. Also, it is trading at rather expensive levels at just over 1.48x price/book and 0.39x price/sales. Compared to others, Patterson Companies, Inc. is in a different league with regards to profitability, having net margins of 3%. To put some perspective around this, the industry’s average net margin is 14.05%. PDCO’s ROE is 11.6%, which is also considerably worse than the industry’s ROE of 15.64%. It’s also very liquid in the near term, with a current ratio of 1.8. The stock has a debt/capital of 0.59.

Shares of Patterson Companies, Inc. (PDCO) have gained 3.5% since the company’s Apr-18 earnings report. Over the past 12 fiscal quarters, Patterson Companies, Inc. (NASDAQ:PDCO) has topped consensus earnings estimates in 5 quarters (41%), missed earnings in 5 quarters (41%), whereas at 2 occasion EPS met analyst expectations. PDCO last reported earnings on August 30, 2018 when it released Jul-18 results that receded expectations. The company raked in $0.26 per share, -98.93% change on the same period last year. That was worse than consensus for $0.34. Revenue for the recent quarter stood at $1.34 billion, up 2% on last year and above the $1.3 billion predicted by analysts. For this quarter, Wall Street analysts forecast revenue in a range of $1.38 billion to $1.45 billion, which should be compared with $0 generated last year.