Shares of Tractor Supply (
TSCO Quick Quote TSCO - Free Report) have been strong performers lately, with the stock up 11.4% over the past month. The stock hit a new 52-week high of $179.25 in the previous session. Tractor Supply has gained 25.9% since the start of the year compared to the 0.1% move for the Zacks Retail-Wholesale sector and the 7.8% return for the Zacks Retail - Miscellaneous industry. What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on January 28, 2021, Tractor Supply reported EPS of $1.64 versus consensus estimate of $1.52.
For the current fiscal year, Tractor Supply is expected to post earnings of $6.67 per share on $10.86 billion in revenues. This represents a -2.91% change in EPS on a 2.27% change in revenues. For the next fiscal year, the company is expected to earn $7.18 per share on $11.44 billion in revenues. This represents a year-over-year change of 7.65% and 5.3%, respectively.
Tractor Supply may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
Tractor Supply has a Value Score of C. The stock's Growth and Momentum Scores are A and D, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 26.5X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 20.1X versus its peer group's average of 7.8X. Additionally, the stock has a PEG ratio of 2.94. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to look at the Zacks Rank for the stock, as this supersedes any trend on the style score front. Fortunately, Tractor Supply currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Tractor Supply meets the list of requirements. Thus, it seems as though Tractor Supply shares could have a bit more room to run in the near term.
How Does Tractor Supply Stack Up to the Competition?
Shares of Tractor Supply have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also impressive, including Hibbett Sports (
HIBB Quick Quote HIBB - Free Report) , Tractor Supply ( TSCO Quick Quote TSCO - Free Report) , and Five Below ( FIVE Quick Quote FIVE - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Tractor Supply. Still, the fundamentals for Tractor Supply are promising, and it still has potential despite being at a 52-week high.