Patterson Companies, Inc. (PDCO) | Investment Case

1. Company Snapshot

1.a. Company Description

Patterson Companies, Inc.engages in distribution of dental and animal health products in the United States, the United Kingdom, and Canada.The company operates through three segments: Dental, Animal Health, and Corporate segments.

The Dental segment offers consumable products, including infection control, restorative materials, and instruments; basic and advanced technology and dental equipment; practice optimization solutions, such as practice management software, e-commerce, revenue cycle management, patient engagement solutions, and clinical and patient education systems.It also provides a range of related services comprising software and design services, maintenance and repair, and equipment financing.The Animal Health segment distributes biologicals, pharmaceuticals, vaccines, parasiticides, diagnostics, prescription and non-prescription diets, nutritional's, consumable supplies, equipment, and software, as well as value-added services.

This segment also provides private label portfolio of products to veterinarians, producers, and retailers under the Aspen, First Companion, and Patterson Veterinary brands.The Corporate segment offers customer financing services; and sells other miscellaneous products.It serves dentists, laboratories, institutions, other healthcare professionals, veterinarians, other animal health professionals, production animal operators, and animal health product retailers.

The company was formerly known as Patterson Dental Company and changed its name to Patterson Companies, Inc.in June 2004.Patterson Companies, Inc.

was founded in 1877 and is headquartered in Saint Paul, Minnesota.

Show Full description

1.b. Last Insights on PDCO

Patterson Companies' recent performance is driven by strength in its Animal Health segment, which contributed to its overall topline growth in Q2 fiscal 2025. The company's partnership extension with PDS Health is also expected to streamline operations, optimize efficiency, and maximize profitability. Additionally, the acquisition deal with Patient Square Capital at a valuation of approximately $4.1 billion is seen as a positive development.

1.c. Company Highlights

Last Price	31.33
Change Percentage	-0.90%
Open	31.33
Previous Close	31.33
Market Cap ( Millions)	2772
Volume	6773075
Year High	31.79
Year Low	19.45
M A 50	31.11
M A 200	26.03

FCF Yield	-28.19%
Dividend Yield	0.00%
ROE	7.41%
Debt / Equity	57.97%
Net Debt / EBIDTA	218.82%
Price To Book	2.8
Price Earnings Ratio	38.57
Price To FCF	-3.55
Price To sales	0.58
EV / EBITDA	16.02

2. Transcript Summary

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3. NewsRoom

Patterson Companies Completes Acquisition by Patient Square Capital

Apr -22

Source: businesswire.com

Sterling Infrastructure Set to Join S&P SmallCap 600

Apr -14

Source: prnewswire.com

Patterson Companies, Inc. Shareholders Approve Acquisition by Patient Square Capital

Apr -01

Source: businesswire.com

PDCO Q3 Earnings & Sales Miss Estimates, Margins Contract

Feb -27

Source: zacks.com

Patterson Cos. (PDCO) Q3 Earnings and Revenues Lag Estimates

Feb -27

Source: zacks.com

Patterson Companies Reports Fiscal 2025 Third Quarter Operating Results

Feb -26

Source: businesswire.com

Patterson Companies Announces Expiration of “Go-Shop” Period

Jan -21

Source: businesswire.com

SHAREHOLDER INVESTIGATION: Halper Sadeh LLC Investigates USAP and PDCO on Behalf of Shareholders

Jan -06

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.62%)

6. Segments

Animal Health

Expected Growth: 2.5%

Patterson Companies' Animal Health segment growth of 2.5% is driven by increasing pet ownership, rising veterinary care spending, and a growing demand for companion animal products. Additionally, the company's strategic partnerships, expanded product offerings, and investments in digital platforms contribute to its growth momentum.

Dental

Expected Growth: 2.8%

Patterson Companies, Inc.'s 2.8% growth in Dental segment is driven by increasing demand for dental consumables, growth in dental equipment sales, and expansion of value-added services. Additionally, strategic acquisitions and partnerships have enhanced the company's product offerings and geographic reach, contributing to the segment's growth.

Corporate Segment

Expected Growth: 3.2%

Patterson Companies, Inc.'s Corporate Segment growth of 3.2% is driven by increasing demand for dental and animal health products, strategic acquisitions, and expansion into new markets. Additionally, the company's focus on digital transformation, cost savings initiatives, and strong relationships with suppliers and customers contribute to its growth momentum.

7. Detailed Products

Dental Consumables

Dental consumables include a wide range of products used in dental procedures, such as restorative materials, impression materials, and infection control products.

Dental Equipment

Dental equipment includes dental chairs, delivery systems, and other equipment used in dental offices.

Dental Technology

Dental technology includes digital imaging systems, practice management software, and other technology solutions for dental offices.

Animal Health Products

Animal health products include vaccines, pharmaceuticals, and other products used to promote animal health and wellness.

Veterinary Equipment

Veterinary equipment includes medical and diagnostic equipment used in veterinary clinics and hospitals.

8. Patterson Companies, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Patterson Companies, Inc. is medium due to the presence of alternative dental and veterinary products and services. However, the company's strong brand recognition and customer loyalty mitigate this threat to some extent.

Bargaining Power Of Customers

The bargaining power of customers is low for Patterson Companies, Inc. due to the company's strong relationships with its customers and the lack of concentration in the dental and veterinary markets.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium for Patterson Companies, Inc. due to the presence of multiple suppliers and the company's ability to negotiate prices. However, the company's dependence on a few key suppliers increases this threat.

Threat Of New Entrants

The threat of new entrants is low for Patterson Companies, Inc. due to the high barriers to entry in the dental and veterinary markets, including regulatory hurdles and the need for significant capital investment.

Intensity Of Rivalry

The intensity of rivalry is high for Patterson Companies, Inc. due to the presence of several competitors in the dental and veterinary markets, leading to a highly competitive environment.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	35.96%
Debt Cost	7.00%
Equity Weight	64.04%
Equity Cost	9.22%
WACC	8.42%
Leverage	56.14%

11. Quality Control: Patterson Companies, Inc. passed 4 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

SIGA Technologies

A-Score: 7.7/10

Value: 6.4

Growth: 8.0

Quality: 9.5

Yield: 10.0

Momentum: 9.0

Volatility: 3.3

1-Year Total Return ->

Spok

A-Score: 7.1/10

Value: 5.5

Growth: 4.9

Quality: 7.9

Yield: 10.0

Momentum: 7.5

Volatility: 6.7

1-Year Total Return ->

Patterson Companies

A-Score: 5.3/10

Value: 6.5

Growth: 3.7

Quality: 5.6

Yield: 3.0

Momentum: 9.0

Volatility: 4.0

1-Year Total Return ->

Innoviva

A-Score: 4.7/10

Value: 4.9

Growth: 5.4

Quality: 6.6

Yield: 0.0

Momentum: 3.0

Volatility: 8.3

1-Year Total Return ->

Zynex

A-Score: 3.4/10

Value: 8.0

Growth: 7.4

Quality: 3.8

Yield: 0.0

Momentum: 0.0

Volatility: 1.0

1-Year Total Return ->

Owens & Minor

A-Score: 2.9/10

Value: 10.0

Growth: 2.7

Quality: 3.8

Yield: 0.0

Momentum: 0.0

Volatility: 1.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

16.66%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

8.42%

Patterson Companies, Inc. - US7033951036

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on PDCO

1.c. Company Highlights

Higher Yield

Less Volatile

Average Quality

Earnings Miss

Revenues Beats

Stable Momentum

Revenues Miss

Weak Momentum

Average Growth

Medium Volatility

Strong Momentum

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (2.62%)

6. Segments

Animal Health

Expected Growth: 2.5%

Dental

Expected Growth: 2.8%

Corporate Segment

Expected Growth: 3.2%

7. Detailed Products

Dental Consumables

Dental Equipment

Dental Technology

Animal Health Products

Veterinary Equipment

8. Patterson Companies, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Patterson Companies, Inc. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

31.33$

Current Price

31.33$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA