Back to top

Analyst Blog

Tractor Supply Company (TSCO - Analyst Report), the specialty retailer is slated to post its second-quarter 2014 results after the market closes on Jul 23, 2014. In the previous quarter, the company delivered a negative earnings surprise of 5.41%. Let’s see how things are shaping up for this announcement.

Factors to Influence the Upcoming Quarter

Tractor Supply’s preliminary results, released on Jul 9, signal a weakness in estimates for the second quarter of fiscal 2014 as the company came up with lower-than-anticipated sales for the quarter. Moreover, the company sounded cautious about its margins and earnings forecast for the second quarter while it slashed its expectations for fiscal 2014. This undermines our expectations for the second quarter.

Tractor Supply reported second quarter sales of $1.58 billion, marking an 8.8% rise from $1.46 billion in the prior-year quarter but below the Zacks Consensus Estimate of $1.602 billion. The company’s sales were impacted by soft comparable store sales as well as weaker than anticipated sales of some seasonal merchandise especially in the Northern regions and in the safe category together with deflation effects.

Earnings Whispers?

Our proven model does not conclusively show that Tractor Supply is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP (Expected Surprise Prediction) and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP: Tractor Supply currently has an Earnings ESP of 0.00%. This is because the Most Accurate estimate is in line with the Zacks Consensus Estimate of 95 cents per share.

Zacks Rank #4 (Sell): Tractor Supply’s Zacks Rank #4 when combined with a zero ESP makes surprise prediction unlikely. We caution against stocks with a Zacks Ranks #4 and #5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows they have the right combination of elements to post an earnings beat this quarter:  

Avis Budget Group Inc. (CAR - Analyst Report) with an Earnings ESP of +3.18% holds a Zacks Rank #2 (Buy).

Colgate-Palmolive Co. (CL - Analyst Report) has an Earnings ESP of +1.37% and a Zacks Rank #2.

Marinemax Inc. (HZO - Snapshot Report) has an Earnings ESP of +13.21% and a Zacks Rank #2.

Please login to Zacks.com or register to post a comment.