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Here's Why Patterson Companies Stock Is Sliding Today

By Cory Renauer – Jun 23, 2021 at 1:17PM

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Management's uninspiring outlook for fiscal 2022 was not what investors wanted to hear.

What happened

Shares of Patterson Companies (PDCO -2.18%) were under pressure Wednesday following the company's fiscal fourth-quarter 2021 earnings report. As of 1:11 p.m EDT, the stock had fallen by 12%.

Net sales reached $1.56 billion during the three-month period that ended April 24, a result that met analysts' expectations. On the bottom line, though, Patterson Companies' adjusted earnings fell 12% year over year to $0.38 per share. The average analyst following the company was expecting earnings of $0.52 per share.

So what 

Patterson Companies is a leading distributor of dental and animal health products that became harder to distribute during the pandemic-necessitated lockdowns. While its bottom-line miss was disappointing, investors were downright troubled by the guidance management provided.

Investor looking at their computer.

Image source: Getty Images.

Now that many of the headwinds of the pandemic have eased, investors were hoping for a more encouraging outlook than the company provided. In its fiscal 2022, Patterson Companies expects adjusted earnings per share in the range of $1.90 to $2.05. The low end of that guidance range is $0.01 per share less than it just reported for its fiscal 2021.

Now what

Patterson Companies' main competitor in the dental distribution business, Henry Schein (HSIC -0.57%), recently raised its adjusted earnings guidance floor for 2021 to $3.70 per share. That would be significantly better than last year's adjusted earnings result of $2.97 per share, but much of that gain is expected to come from its medical supply business, not from distributing dental products. 

At recent share prices, Patterson Companies offers a tempting 3.4% dividend yield, but I wouldn't recommend trying to catch this falling stock for the dividend. The company hasn't raised its payout since 2017 -- and with a stagnating bottom line, it's unlikely to raise it much in the foreseeable future.

Cory Renauer has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Patterson Companies, Inc. Stock Quote
Patterson Companies, Inc.
PDCO
$24.26 (-2.18%) $0.54
Henry Schein, Inc. Stock Quote
Henry Schein, Inc.
HSIC
$66.55 (-0.57%) $0.38

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