Back to top

Image: Bigstock

Tractor Supply Up 16% in 3 months, Comps a Key Catalyst

Read MoreHide Full Article

Tractor Supply Company (TSCO - Free Report) is on a rising trajectory, backed by solid comparable store sales as well as well-chalked plans to meet consumer needs across stores and e-commerce platforms.  This Zacks Rank #3 (Hold) company’s shares have gained 16% in the past 3 months compared with the industry’s 11.5% rise. Let’s take a closer look at the winning sides of this farm products retailer’s business.

Comps are an Ace in the Stack

During second-quarter 2020, Tractor Supply’s top line improved year-on-year and surpassed the Zacks Consensus Estimates, primarily due to robust comparable store sales performance. Comparable store sales in the quarter increased 30.5%, led by growth of 15.8% in comparable average ticket and 14.6% in comparable transaction count. The growth in the metric was backed by sturdy demand for spring and summer seasonal categories as well as robust growth in everyday merchandise, including consumable, usable and edible products. Going ahead, the company expects comps growth of 12-18% for the third quarter.

Prudent Omni-Channel Moves

Tractor Supply is on track with integrating physical and digital operations. Moreover, it is benefiting from the roll out of capabilities like stockyard in-store kiosk and mobile point-of-sale (PoS) in all its stores as well as enhancing Tractor Supply credit card offering.

Markedly, the company’s omni-channel investments, including curbside pickup, same day, next-day delivery, re-launched website and new mobile app, helped record triple-digits digital sales growth in the second quarter.

Other Growth Initiatives

Tractor Supply is on track with the expansion of its store base. The company plans to increase its domestic store to 2,500 in the long term. In the second quarter, it opened 18 namesake and three Petsense stores. For fiscal 2020, the company expects to open 75-80 Tractor Supply stores. It now anticipates opening 10 new Petsense locations compared with the prior outlook of 10-15 stores.

Further, the company is on track to build up on "Out Here" lifestyle assortment to gain new customers and market share. Additionally, the company is implementing various technology and service enhancements across the enterprise. It is also progressing well with merchandising strategies and has been advancing efforts to remain locally relevant.

Wrapping Up

We believe that the aforementioned efforts will reap benefits, thereby continuing to boost sales across the company’s stores and online footprint. These upsides as well as the company’s regular dividend payouts are likely to keep garnering investor’s attention.

Other Stocks to Consider

Target (TGT - Free Report) , sporting a Zacks Rank #1 (Strong Buy), has an expected long-term earnings growth rate of 7.2%. You can see the complete list of today’s Zacks #1 Rank stocks here.

Big Lots (BIG - Free Report) has an expected long-term earnings growth rate of 7.1% and a Zacks Rank #2 (Buy).

The Kroger Co. (KR - Free Report) has an impressive long-term earnings growth rate of 5.5% and a Zacks Rank #2.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Target Corporation (TGT) - free report >>

Big Lots, Inc. (BIG) - free report >>

Tractor Supply Company (TSCO) - free report >>

The Kroger Co. (KR) - free report >>