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In time for the Goldman Sachs 23rd Annual Global Retailing Conference to be held on Sep 8, 2016, Tractor Supply Company (TSCO - Free Report) provided a soft third-quarter 2016 guidance based on the quarter-to-date performance and consequently trimmed its full-year 2016 projections.
Tractor Supply expects third-quarter net sales in the band of $1.54−$1.55 billion, marking a nearly 4.2%−5.0% rise from $1.48 billion recorded in the prior-year quarter. Comparable store sales (comps) for the quarter are estimated in the range of flat to down 1%, against a 2.9% increase recorded in the year-ago quarter. Due to lower sales, the company anticipates net income per diluted share in the band of 65−67 cents.
The reason behind the soft third-quarter outlook is the economic challenges that have been impacting consumer spending in the markets where the company operates. This has had a major impact on the agricultural and energy sectors. On studying the results-to-date and noting the trends, management cited three reasons for the lower-than-expected sales. First, the company notes lower sales and transaction count in communities that are heavily dependent on the agricultural industry.
Second, the energy-producing regions are experiencing lower transaction count along with declining comps. The persistent drop in the production of gas, coal and oil has been weighing on the consumer behavior patterns of many of the communities that the company serves. Third, the company has witnessed soft demand for pre-season heating products, like heating fuel and wood stoves, which hurt its sales trends in the Northeast. This scenario sends out early signals of a challenging season for heating and cold weather related products.
So far in the quarter, the Southeast and West regions have delivered solid regional performance due to lower dependence on agricultural and energy markets. Additionally, Tractor Supply continues to witness solid demand for basic items, buoyed by chain-wide quarter-to-date mid-single digit comps in the Livestock and Pet categories.
Backed by the aforementioned pre-season heating trends and economic environment, along with a soft quarter-to-date performance, management trimmed its full-year 2016 guidance. The company now projects net sales in the range of $6.70−$6.75 billion for 2016, compared with $6.8−$6.9 billion estimated earlier. Comps are expected to grow 1.0%−1.7%, compared with a 2.5%−3.5% increase guided earlier. Further, the company anticipates net income between $432−$438 million or earnings per share in the band of $3.22−$3.26. Earlier, management had projected net income in the range of $451−$456 million or earnings per share in the band of $3.35−$3.40.
Currently, Tractor Supply has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Big 5 Sporting Goods Corp. (BGFV - Free Report) , Five Below, Inc. (FIVE - Free Report) and ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA - Free Report) , all carrying a Zacks Rank #2 (Buy).
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Tractor Supply (TSCO) Issues Q3 Guidance, Trims 2016 View
In time for the Goldman Sachs 23rd Annual Global Retailing Conference to be held on Sep 8, 2016, Tractor Supply Company (TSCO - Free Report) provided a soft third-quarter 2016 guidance based on the quarter-to-date performance and consequently trimmed its full-year 2016 projections.
Tractor Supply expects third-quarter net sales in the band of $1.54−$1.55 billion, marking a nearly 4.2%−5.0% rise from $1.48 billion recorded in the prior-year quarter. Comparable store sales (comps) for the quarter are estimated in the range of flat to down 1%, against a 2.9% increase recorded in the year-ago quarter. Due to lower sales, the company anticipates net income per diluted share in the band of 65−67 cents.
The reason behind the soft third-quarter outlook is the economic challenges that have been impacting consumer spending in the markets where the company operates. This has had a major impact on the agricultural and energy sectors. On studying the results-to-date and noting the trends, management cited three reasons for the lower-than-expected sales. First, the company notes lower sales and transaction count in communities that are heavily dependent on the agricultural industry.
Second, the energy-producing regions are experiencing lower transaction count along with declining comps. The persistent drop in the production of gas, coal and oil has been weighing on the consumer behavior patterns of many of the communities that the company serves. Third, the company has witnessed soft demand for pre-season heating products, like heating fuel and wood stoves, which hurt its sales trends in the Northeast. This scenario sends out early signals of a challenging season for heating and cold weather related products.
So far in the quarter, the Southeast and West regions have delivered solid regional performance due to lower dependence on agricultural and energy markets. Additionally, Tractor Supply continues to witness solid demand for basic items, buoyed by chain-wide quarter-to-date mid-single digit comps in the Livestock and Pet categories.
Backed by the aforementioned pre-season heating trends and economic environment, along with a soft quarter-to-date performance, management trimmed its full-year 2016 guidance. The company now projects net sales in the range of $6.70−$6.75 billion for 2016, compared with $6.8−$6.9 billion estimated earlier. Comps are expected to grow 1.0%−1.7%, compared with a 2.5%−3.5% increase guided earlier. Further, the company anticipates net income between $432−$438 million or earnings per share in the band of $3.22−$3.26. Earlier, management had projected net income in the range of $451−$456 million or earnings per share in the band of $3.35−$3.40.
TRACTOR SUPPLY Price
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Zacks Rank
Currently, Tractor Supply has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same industry include Big 5 Sporting Goods Corp. (BGFV - Free Report) , Five Below, Inc. (FIVE - Free Report) and ULTA Salon, Cosmetics & Fragrance, Inc. (ULTA - Free Report) , all carrying a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
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Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>