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Tractor Supply (TSCO) to Post Q3 Earnings: What's in Store?

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Tractor Supply Company (TSCO - Free Report) is slated to report third-quarter 2021 results on Oct 21, 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 third-quarter earnings is pegged at $1.65 per share, suggesting an increase of 1.9% from the year-ago period’s reported figure. The consensus mark has moved up 2.5% in the past 30 days. For third-quarter revenues, the consensus mark is pegged at $2.87 billion, suggesting 10.1% growth from the prior-year quarter’s reported figure.

In the last reported quarter, the company reported an earnings beat of 8.5%. It has delivered an earnings surprise of 22.6%, on average, in the trailing four quarters.

Factors to Note

Tractor Supply has been gaining from solid demand for seasonal categories and everyday merchandise, including consumable, usable and edible products. Its focus on growth initiatives, including the expansion of store base and the incorporation of technological advancements to induce traffic and drive the top line, has also been driving growth. Improved marketing and merchandising initiatives as well as supply-chain efficiencies are likely to continue aiding comps in the quarter under review.

The company has also been 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 the Tractor Supply credit card offering, and investments in its supply chain. Its omni-channel investments, including curbside pickup, same-day, next-day delivery, a re-launched website and new mobile app, as well as the Neighbor's Club loyalty program also bode well. The expansion of its Buy Online Pickup in Store facility to include the drive-through pickup service is also likely to have aided top-line growth in the third quarter.

It has been progressing well with its growth efforts such as Life Out Here and ‘ONETractor’ strategies. As part of its Life Out Here Strategy, management has completed 160 Project Fusion remodels of existing Tractor Supply stores, which have been performing well with positive customer feedback. Gains from these efforts are likely to get reflected in its third-quarter results.

However, higher wages and increased investments in strategic initiatives, including the relaunch of the Neighbor’s Club loyalty program and product mix shift, are expected to have weighed on margins. Management highlighted that elevated imports, freight, wages, and commodity costs are likely to have acted as deterrents.

On its last reported quarter’s earnings call, it forecast a gross margin decline for the second half of 2021 due to higher transportation costs, and strength in consumable, usable and edible products. Incremental capital spending due to new in-store initiatives and providing technology support for the Life Out Here Strategy remains concerning.

Tractor Supply Company Price and EPS Surprise


Tractor Supply Company Price and EPS Surprise

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


What the Zacks Model Unveils

Our proven model predicts an earnings beat for Tractor Supply this season. 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 #2 and an Earnings ESP of +0.90%.

Other Stocks Poised to Beat Earnings Estimates

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

The TJX Companies (TJX - Free Report) has an Earnings ESP of +2.60% and it sports currently a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

American Eagle Outfitters (AEO - Free Report) presently has an Earnings ESP of +0.95% and a Zacks Rank #2.

DICK’S Sporting Goods (DKS - Free Report) has an Earnings ESP of +5.09% and a Zacks Rank #2 at present.