In an attempt to boost shareholder value, Tractor Supply Company’s (TSCO - Analyst Report) Board of Directors authorized the company to buy back additional shares worth $1 billion, taking the total authorization to $2 billion. The program, which was initiated in Feb 2007, has now been extended to Dec 31, 2017.
After including the effect of a two for one stock split on shares repurchased before Sep 27, 2013, the company had bought back 37.7 million shares for nearly $838.6 million, as of Dec 28, 2013, post which it had shares worth $1.2 billion remaining under its expanded program. These remaining shares constitute roughly 12% of the company’s common stock, considering current prices.
The company’s healthy cash flows and efficient capital allocation provide it with ample financial liquidity to return excess cash to its shareholders. This in turn, has enabled Tractor Supply to remain focused on its balanced strategic approach to ensure a strong financial position.
The company’s endeavor to enhance shareholder value is also evident from its dividend paying nature. Earlier this month, this Tennessee-based company declared a quarterly dividend of 13 cents a share to shareholders of record as on Feb 24, 2014, payable on Mar 11, 2014.
Tractor Supply is the largest operator of farm and ranch stores in the U.S., and has a unique market niche of serving the lifestyle needs of recreational farmers and ranchers. The company recently posted its fourth quarter fiscal 2013 earnings results of 68 cents, which was 23.6% higher than the prior-year quarter.
Moreover, it beat the Zacks Consensus Estimate of 65 cents by 4.6%. Results benefited mainly from improvement in both the top line and margins. As a result, this farm and ranch store retailer provided a favorable outlook.
We believe that Tractor Supply continues to progress well with its growth initiatives, which include expanding its store base and incorporating technological advancements to serve clients better. The company leverages an extensive network of stores to penetrate into target markets, which in turn, enable the company to generate healthy sales and gain market share.
Tractor Supply currently holds a Zacks Rank #3 (Hold). Other better-ranked stocks warranting a look in the retail space include ITOCHU Corp. (ITOCY) holding Zacks Rank #1 (Strong Buy) and Tesco PLC (TSCDY) and Kingfisher plc (KGFHY), holding a Zacks Rank #2 (Buy).