What happened
Shares of Patterson Companies (PDCO 0.81%) rose by more than 12% on Wednesday as a result of its positive fiscal fourth-quarter earnings report before pulling back to an increase of around 9% as of 11:09 a.m. ET. The dental and veterinary supplies provider reported adjusted earnings per share (EPS) of $0.71, significantly above analysts' consensus estimate of only $0.55.
It also beat the average of analyst projections for revenue, bringing in $1.64 billion in net sales compared to an estimated $1.59 billion.
So what
Both Patterson's dental supply segment and its animal health segment posted growth, even though its infection control products aren't as in-demand as they were during the early phase of the pandemic. That's good news for investors, because it means revenue growth can continue even as major drivers from the recent past are rapidly fading.
Management doesn't predict further pandemic-based disruptions to its business, so Patterson's sales volume and margins might continue to normalize.
Now what
Management's guidance for fiscal 2023 calls for adjusted EPS between $2.25 and $2.35. Right now, the consensus estimate from analysts is for $2.24 in EPS, but some might revise their expectations in light of the company's newly published information.
Analysts may be slightly overestimating the potential impacts of rising inflation and macroeconomic disruption, both of which management cited specifically as part of the rationale for its guidance figures. Investors should be wary that if there's a slowdown next quarter, analyst downgrades might be coming, which might harm the stock's price.
