What happened

Shares of Patterson Companies (NASDAQ:PDCO) stock jumped after management reported its fiscal Q2 2020 results this morning. Wall Street had predicted the dental and animal health products distributor would earn pro forma profits of just $0.34 per share in the quarter, but Patterson reported $0.39 instead. Sales for the quarter tracked precisely with Wall Street estimates -- $1.4 billion -- but the bigger-than-expected profit took investors by (pleasant) surprise.

As of 11:35 a.m. EST, Patterson shares are up 11.5%.

Green arrow rising over numerals 2020.

Image source: Getty Images.

So what

The news wasn't all good. Patterson's Q2 2020 sales grew 1% in comparison with last year's Q2, and pro forma profits, while better than expected, were only flat at $0.39.

Results as calculated according to generally accepted accounting principles (GAAP), meanwhile, were pretty miserable -- a $0.35-per-share loss, versus $0.31 per share earned a year ago. But management explained that this was because of a "reserve of $58.3 million related to the agreement in principle with the U.S. Attorney's Office for the Western District of Virginia's ('USAO-WDVA') investigation into the sales of prescription animal health products" -- basically a one-time charge to earnings that shouldn't repeat in future quarters.

Now what

Indeed, Patterson is now pointing to its "continued revenue growth and improved profitability in the second quarter" as evidence of "traction" that will result in improved earnings throughout the balance of this fiscal year. Management now predicts that fiscal 2020 will bring between $0.42 and $0.52 per share GAAP this year and between $1.36 and $1.46 per share, pro forma.

Given that Wall Street is only looking for $1.37 per share, pro forma, for the year, this improved guidance holds out the prospect for additional earnings beats as the year progresses -- and investors are looking forward to it.