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Tractor Supply Company
by Tracey RyniecApril 23, 2012 | Comments : 0 Recommended this article: (0)
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Tractor Supply Company operates 1117 stores in 44 states that supply products for recreational farmers and ranchers. The retailer focuses on the needs of those who live in rural areas, including tradesmen and small businesses.
The company offers merchandise in areas such as equine, pet and small animal products; hardware, truck and towing products; seasonal lawn and garden products; maintenance products; and recreational clothing and footwear.
First Quarter Sales Jump 22%
On Apr 12, Tractor Supply announced a first quarter earnings update ahead of its actual Apr 25 earnings report.
Sales jumped 22% to a record $1 billion from $836.6 million a year ago. Same store sales rose 11.5%.
That warmer than expected spring? It boosted sales in the quarter.
Earnings per share in the quarter were expected to be between 53 and 55 cents. The company estimated that 9 to 11 cents of that was pull forward from the second quarter due to the early spring.
Gross margin was also expected below that of last year's level due to markdowns on winter seasonal merchandise in January and February because of the early warm weather.
Raised 2012 Guidance
Given the strong first quarter, Tractor Supply raised full year sales guidance to $4.61 to $4.68 billion from $4.56 to $4.66 billion.
Same store sales are also expected to be hotter, rising between 4% and 5.5%, up from the prior guidance of 3% to 5%.
The 2012 Zacks Consensus Estimate Climbs
Given all the good news about the quarter from the company, it's not surprising that the analysts have all been busy raising first quarter and full year estimates.
For the quarter, the Zacks Consensus is now calling for 54 cents which is, not surprisingly, in the middle of the company's own updated guidance range of 53 cents to 55 cents.
For the full year, 16 out of 19 estimates have been revised higher in the last 30 days. That has pushed the 2012 Zacks Consensus up to $3.64 from $3.50 per share.
That is 2012 earnings growth of 21%.
A Premium To Be Paid for Tractor Supply
Tractor Supply is trading at a premium to its peers. It has a forward P/E of 27. Its peers trade, on average, with a forward P/E of just 18.
But investors are betting on continued growth. It has a 1-year return on equity (ROE) of 23.5%, well above its peers at 13.5%.
The chart is a thing of beauty. Tractor Supply is the perfect momentum stock.
Look for its actual first quarter report and conference call on Apr 25. It should be a hot one.
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