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Factors Likely to Shape Tractor Supply's (TSCO) Q2 Earnings

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Tractor Supply Company (TSCO - Free Report) is slated to report second-quarter 2021 results on Jul 19, before the opening bell. The leading ranch store retailer is expected to have witnessed revenue and earnings growth in the to-be-reported quarter.

The Zacks Consensus Estimate for second-quarter earnings is pegged at $2.91 per share, suggesting an increase of 0.3% from the year-ago period’s reported figure. The consensus mark has been unchanged in the past 30 days. For second-quarter revenues, the consensus mark is pegged at $3.47 billion, suggesting 9.2% growth from the prior-year quarter’s reported figure.

In the last reported quarter, the company reported an earnings beat of 56.6%. Moreover, it has delivered an earnings surprise of 23.1%, on average, in the trailing four quarters.

Tractor Supply Company Price and EPS Surprise

 

Tractor Supply Company Price and EPS Surprise

Tractor Supply Company price-eps-surprise | Tractor Supply Company Quote

Factors to Note

Tractor Supply has been delivering a positive surprise trend, thanks to the robust demand for seasonal categories and everyday merchandise, including consumable, usable and edible products, particularly in the online platform. Its focus on growth initiatives, which include the expansion of store base and the incorporation of technological advancements to induce traffic and drive the top line, has also been growth drivers.

The company’s omni-channel investments, including curbside pickup, same-day and next-day delivery, a relaunched website, and a new mobile app, have been aiding top-line growth. Its newly launched mobile app as well as the Neighbor's Club loyalty program also bodes well. The company’s Life Out Here and ‘ONETractor’ strategies are likely to have contributed to e-commerce and top-line growth in the to-be-reported quarter.

Lower depth and frequency of sales promotions as well as lesser clearance activity and favorable product mix have been driving gross margin growth. Leverage in occupancy and other costs due to increasing comps have been resulting in lower SG&A expense rates. The continued leverage in these costs is likely to have aided the second-quarter bottom line.

However, Tractor Supply has been witnessing incremental costs related to the pandemic and higher incentive compensation, which are expected to have acted as a headwind. On the last reported quarter’s earnings call, management predicted that higher freight costs and fuel expenses will persist throughout 2021. It also expected rising transportation costs to dent gross margins in the second quarter of 2021. Management also outlined incremental capital spending due to new in-store initiatives and providing technology support for the Life Out Here Strategy. Higher costs are likely to have partly affected the bottom-line numbers for the second quarter.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for Tractor Supply this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Tractor Supply has a Zacks Rank #3 and an Earnings ESP of 0.00%.

Stocks Poised to Beat Earnings Estimates

Here are some companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat.

Boot Barn Holdings, Inc. (BOOT - Free Report) has an Earnings ESP of +2.42% and it currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

BJ’s Restaurants, Inc. (BJRI - Free Report) has an Earnings ESP of +8.51% and a Zacks Rank #2 at present.

Capri Holdings Limited (CPRI - Free Report) currently has an Earnings ESP of +3.87% and a Zacks Rank #3.