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Tractor Supply (TSCO) Focuses on Growth Plans: Stock Rises
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Tractor Supply Company (TSCO - Free Report) has been witnessing momentum, driven by sturdy demand and strong market share gains. The company’s focus on integrating its physical and digital operations to offer consumers a seamless shopping experience bodes well. It is persistently focusing on its growth initiatives, which include the expansion of its store base, and the incorporation of technological advancements to boost traffic and drive the top line.
The company’s buyout of Orscheln Farm and Home, and store openings have been aiding its performance. Its ‘ONETractor’ strategy, which is aimed at connecting stores and online shopping, appears encouraging. The company is benefiting from its Life Out Here Strategy and the Neighbor’s Club membership program.
Buoyed by such strengths, shares of this retail farm and ranch store chain have gained 11.9% compared with the industry’s 7.1% growth in the past three months. The Zacks Rank #3 (Hold) company has also outpaced the sector and S&P 500’s improvements of 8.9% and 8.1%, respectively.
The Zacks Consensus Estimate for TSCO’s current financial-year sales and earnings suggests growth of 3.1% and 1%, respectively, from the year-ago reported numbers.
Image Source: Zacks Investment Research
What’s Driving the Stock?
Tractor Supply is persistently focusing on its growth initiatives, which include the expansion of the store base, and the incorporation of technological advancements to induce traffic and drive the top line. The company is well-positioned to expand its store base, remaining on track to increase its domestic store to 2,500 in the long term.
Management intends to continue its store-opening initiatives in 2024. The company plans to open 80 Tractor Supply stores and 10-15 Petsense stores in 2024. Under its capital allocation plans, TSCO expects to continue the Project Fusion remodels and garden center transformations, along with the completion of its 10th distribution center. In 2024, it will continue its planned strategic sale-leaseback program to sell a few existing owned stores.
The Project Fusion is the company’s state-of-the-art space productivity program built to enrich customer experience in the mature store base. Another key component of the company’s space productivity initiatives is the transformation of its Side Lot. Its Project Fusion and Side Lot model transformations have been significant investments toward stores.
These store investments target achieving higher market share, and boost productivity across the existing and new stores. Notably, TSCO boasts more than 700 Project Fusion stores, accounting for 30% of its store base. It continues to experience a positive halo impact of the garden center to the present store and vice versa. The addition of product categories, greater ease of shopping and modern services help the company serve its customers efficiently.
Tractor Supply is focused on integrating its physical and digital operations to offer consumers a seamless shopping experience. Incidentally, the company remains on track with the ‘ONETractor’ strategy that is aimed at connecting stores and online shopping. Its omni-channel investments include curbside pickup, same-day and next-day delivery, a re-launched website, and a new mobile app.
Earlier, it launched Tractor Supply, Visa Credit Card, which allows customers to earn points on their everyday purchases, both in-store and anywhere Visa is accepted. Also, the buyout of Orscheln Farm and Home, and store openings bode well.
Its Neighbor's Club program added more than four million customers, accounting for 77% of digital sales in 2023, driven by continued favorable trends and higher retention. The company’s digital business reached another year of record sales, generating above $1 billion in annual sales for the first time. Since its launch, it had more than 7 million downloads of its mobile app and 2 million in the year.
Moving ahead, management looks forward to mirroring the in-store legendary service and the digital experience via personalized and conversational commerce. It aims to leverage AI technologies to boost search, redesign checkout, and add a refreshed homepage on personalization.
Hiccups to Overcome
Tractor Supply has been witnessing higher SG&A expenses, driven by increases in depreciation and amortization, the opening of a distribution center, and the impacts of higher medical claims. Also, cost inflation is concerning. Due to these factors, selling, general and administrative (SG&A) expenses, including depreciation and amortization, as a percentage of sales, expanded 113 bps year over year to 26.2%.
In 2024, TSCO anticipates the gross margin expansion to offset SG&A, driven by a mid-teen increase in depreciation and amortization, and higher investments. Also, the expansion of the distribution center network is likely to pressure SG&A by 10-15 bps. For 2024, comps are likely to come between a decline of 1% and growth of 1.5%, whereas it reported a 6.3% increase last year.
The Zacks Consensus Estimate for AEO’s fiscal 2024 sales and EPS indicates 3.3% and 12.5% growth, respectively, from the year-ago period’s reported levels. It has a trailing four-quarter earnings surprise of 22.7%, on average.
Abercrombie, a specialty retailer of premium, high-quality casual apparel for men, women, and kids, currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Abercrombie’s fiscal 2024 sales and earnings indicates growth of 5.6% and 19.1%, respectively, from the year-ago reported numbers. ANF has a trailing four-quarter earnings surprise of 715.6%, on average.
DICK'S Sporting, which operates as a major omni-channel sporting goods retailer, currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for DICK'S Sporting current financial-year sales and earnings suggests improvements of 1.3% and 2.9%, respectively, from the year-ago period’s actuals. DKS has a trailing four-quarter earnings surprise of 3.1%, on average.
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Tractor Supply (TSCO) Focuses on Growth Plans: Stock Rises
Tractor Supply Company (TSCO - Free Report) has been witnessing momentum, driven by sturdy demand and strong market share gains. The company’s focus on integrating its physical and digital operations to offer consumers a seamless shopping experience bodes well. It is persistently focusing on its growth initiatives, which include the expansion of its store base, and the incorporation of technological advancements to boost traffic and drive the top line.
The company’s buyout of Orscheln Farm and Home, and store openings have been aiding its performance. Its ‘ONETractor’ strategy, which is aimed at connecting stores and online shopping, appears encouraging. The company is benefiting from its Life Out Here Strategy and the Neighbor’s Club membership program.
Buoyed by such strengths, shares of this retail farm and ranch store chain have gained 11.9% compared with the industry’s 7.1% growth in the past three months. The Zacks Rank #3 (Hold) company has also outpaced the sector and S&P 500’s improvements of 8.9% and 8.1%, respectively.
The Zacks Consensus Estimate for TSCO’s current financial-year sales and earnings suggests growth of 3.1% and 1%, respectively, from the year-ago reported numbers.
Image Source: Zacks Investment Research
What’s Driving the Stock?
Tractor Supply is persistently focusing on its growth initiatives, which include the expansion of the store base, and the incorporation of technological advancements to induce traffic and drive the top line. The company is well-positioned to expand its store base, remaining on track to increase its domestic store to 2,500 in the long term.
Management intends to continue its store-opening initiatives in 2024. The company plans to open 80 Tractor Supply stores and 10-15 Petsense stores in 2024. Under its capital allocation plans, TSCO expects to continue the Project Fusion remodels and garden center transformations, along with the completion of its 10th distribution center. In 2024, it will continue its planned strategic sale-leaseback program to sell a few existing owned stores.
The Project Fusion is the company’s state-of-the-art space productivity program built to enrich customer experience in the mature store base. Another key component of the company’s space productivity initiatives is the transformation of its Side Lot. Its Project Fusion and Side Lot model transformations have been significant investments toward stores.
These store investments target achieving higher market share, and boost productivity across the existing and new stores. Notably, TSCO boasts more than 700 Project Fusion stores, accounting for 30% of its store base. It continues to experience a positive halo impact of the garden center to the present store and vice versa. The addition of product categories, greater ease of shopping and modern services help the company serve its customers efficiently.
Tractor Supply is focused on integrating its physical and digital operations to offer consumers a seamless shopping experience. Incidentally, the company remains on track with the ‘ONETractor’ strategy that is aimed at connecting stores and online shopping. Its omni-channel investments include curbside pickup, same-day and next-day delivery, a re-launched website, and a new mobile app.
Earlier, it launched Tractor Supply, Visa Credit Card, which allows customers to earn points on their everyday purchases, both in-store and anywhere Visa is accepted. Also, the buyout of Orscheln Farm and Home, and store openings bode well.
Its Neighbor's Club program added more than four million customers, accounting for 77% of digital sales in 2023, driven by continued favorable trends and higher retention. The company’s digital business reached another year of record sales, generating above $1 billion in annual sales for the first time. Since its launch, it had more than 7 million downloads of its mobile app and 2 million in the year.
Moving ahead, management looks forward to mirroring the in-store legendary service and the digital experience via personalized and conversational commerce. It aims to leverage AI technologies to boost search, redesign checkout, and add a refreshed homepage on personalization.
Hiccups to Overcome
Tractor Supply has been witnessing higher SG&A expenses, driven by increases in depreciation and amortization, the opening of a distribution center, and the impacts of higher medical claims. Also, cost inflation is concerning. Due to these factors, selling, general and administrative (SG&A) expenses, including depreciation and amortization, as a percentage of sales, expanded 113 bps year over year to 26.2%.
In 2024, TSCO anticipates the gross margin expansion to offset SG&A, driven by a mid-teen increase in depreciation and amortization, and higher investments. Also, the expansion of the distribution center network is likely to pressure SG&A by 10-15 bps. For 2024, comps are likely to come between a decline of 1% and growth of 1.5%, whereas it reported a 6.3% increase last year.
Stocks to Consider
Some better-ranked stocks are American Eagle Outfitters (AEO - Free Report) , Abercrombie & Fitch (ANF - Free Report) and DICK'S Sporting Goods (DKS - Free Report) .
American Eagle, a specialty retailer of casual apparel, accessories and footwear, currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for AEO’s fiscal 2024 sales and EPS indicates 3.3% and 12.5% growth, respectively, from the year-ago period’s reported levels. It has a trailing four-quarter earnings surprise of 22.7%, on average.
Abercrombie, a specialty retailer of premium, high-quality casual apparel for men, women, and kids, currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Abercrombie’s fiscal 2024 sales and earnings indicates growth of 5.6% and 19.1%, respectively, from the year-ago reported numbers. ANF has a trailing four-quarter earnings surprise of 715.6%, on average.
DICK'S Sporting, which operates as a major omni-channel sporting goods retailer, currently carries a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for DICK'S Sporting current financial-year sales and earnings suggests improvements of 1.3% and 2.9%, respectively, from the year-ago period’s actuals. DKS has a trailing four-quarter earnings surprise of 3.1%, on average.