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Tractor Supply (TSCO) Up 33.8% in a Year: More Room to Rally?
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Tractor Supply Company (TSCO - Free Report) has been gaining from strength in its Life Out Here Strategy and healthy customer trends. Also, sturdy demand for everyday merchandise, including consumable, usable and edible products as well as robust summer seasonal categories bode well.
This led to impressive fourth-quarter 2021 results, wherein both the top and the bottom line improved year over year and surpassed the Zacks Consensus Estimate. This marked the eighth straight quarter of earnings surprise and a seventh consecutive sales beat. Comparable store sales (comps) grew 12.7% year over year, marking the seventh straight quarter of more than 10% increase in comps.
Driven by these factors, management provided an upbeat guidance for 2022 on its last earnings call. Tractor Supply now expects net sales of $13.6-$13.8 billion, indicating an improvement from $12.73 billion reported last year. Earnings per share are likely to be $9.20-$9.50, suggesting growth from the prior-year reported figure of $8.61.
Shares of this Zacks Rank #2 (Buy) stock have rallied 33.8% in a year’s time against the industry’s decline of 20.2%.
Image Source: Zacks Investment Research
Factors Narrating TSCO’s Growth Story
Tractor Supply is firmly focused on integrating its physical and digital operations to offer consumers a seamless shopping experience. TSCO’s omni-channel investments, including the curbside pickup, same day, next-day delivery, a re-launched website and a new mobile app contributed to the digital sales growth in the fourth quarter. TSCO witnessed solid double-digit sales growth in its e-commerce business, delivering the 38th consecutive quarter of increase. Its mobile app has more than 2 million downloads and accounts for above 10% of the e-commerce sales.
Tractor Supply’s Neighbor's Club loyalty program has been performing well for a while, with a year-over-year membership increase of 24%. TSCO exited the fourth quarter with above 23.6 million Neighbor's Club members. These members are presently representing roughly 70% of the sales under Neighbor's Club. Going forward, management is likely to reach more than $2 billion in sales by 2026.
TSCO is progressing well with its Life Out Here Strategy, based on its five key pillars, including customers, digitization, execution, team members and a total shareholder return. Earlier, Tractor Supply launched the Field Activity Support Team (FAST) and implemented various technology and service enhancements across the enterprise. TSCO is also on track with its Project Fusion remodels and a Side Lot transformation to remain nationally strong and locally relevant by bringing the latest merchandising strategies to life. Management anticipates transforming the side lots in approximately 100 locations during 2022. These are significant investments toward stores and are expected to boost productivity across the existing and the new stores.
As part of these efforts, management revised the long-term financial growth targets for 2022-2026. It envisions achieving net sales growth of 6-7% for the aforementioned period, while comps are expected to grow 4-5%. The operating margin is expected to be 10.1-10.6%, up from the earlier mentioned 9-9.5%. Earnings per share are likely to grow 8-11%, hinting at an increase from the previously guided 8-10% growth.
Tractor Supply is also on track with its store-opening initiatives to woo traffic and drive the top line. In the December quarter, TSCO opened 36 Tractor Supply stores and one Petsense store. It plans to open 75-80 Tractor Supply stores and 10 Petsense stores in 2022.
Headwinds to Overcome
TSCO is currently reeling under higher product cost inflation, rising transportation costs and an unfavorable product mix. This, along with costs related to increased investments in the Life Out Here strategy and supply-chain constraints remain concerns. Increased wage rates and additional store labor hours also act as deterrents.
Conclusion
Although higher costs and supply-chain issues remain woes, we believe that strategic initiatives, a solid online show and high demand are likely to help sustain Tractor Supply’s momentum in the days ahead.
The Zacks Consensus Estimate for TSCO’s 2022 sales and earnings per share (EPS) suggests growth of 8.1% and 8.9% each from the respective year-ago reported figures. The consensus mark for 2022 earnings has moved 2% north over the past 30 days to $9.38. Also, a long-term earnings growth rate of 9.8% and a VGM Score of B drive optimism.
The Zacks Consensus Estimate for Nordstrom’s current financial-year sales and EPS suggests growth of 5.7% and 180%, respectively, from the year-ago period’s corresponding reported numbers. JWN has an expected EPS growth rate of 6% for three-five years.
Tapestry presently has a Zacks Rank of 2. The company has a trailing four-quarter earnings surprise of 28.2%, on average.
The Zacks Consensus Estimate for Tapestry’s current financial-year sales and EPS suggests growth of 17.5% and 22.9% each from the respective year-ago period’s reported numbers. TPR has an expected EPS growth rate of 12.5% for three-five years.
Target is currently Zacks #2 Ranked. TGT has a trailing four-quarter earnings surprise of 21.3%, on average.
The Zacks Consensus Estimate for Target’s current financial-year sales and EPS suggests growth of 3.5% and 6.7%, respectively, from the year-ago period’s corresponding reported figures. TGT has an expected EPS growth rate of 16.5% for three-five years.
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Tractor Supply (TSCO) Up 33.8% in a Year: More Room to Rally?
Tractor Supply Company (TSCO - Free Report) has been gaining from strength in its Life Out Here Strategy and healthy customer trends. Also, sturdy demand for everyday merchandise, including consumable, usable and edible products as well as robust summer seasonal categories bode well.
This led to impressive fourth-quarter 2021 results, wherein both the top and the bottom line improved year over year and surpassed the Zacks Consensus Estimate. This marked the eighth straight quarter of earnings surprise and a seventh consecutive sales beat. Comparable store sales (comps) grew 12.7% year over year, marking the seventh straight quarter of more than 10% increase in comps.
Driven by these factors, management provided an upbeat guidance for 2022 on its last earnings call. Tractor Supply now expects net sales of $13.6-$13.8 billion, indicating an improvement from $12.73 billion reported last year. Earnings per share are likely to be $9.20-$9.50, suggesting growth from the prior-year reported figure of $8.61.
Shares of this Zacks Rank #2 (Buy) stock have rallied 33.8% in a year’s time against the industry’s decline of 20.2%.
Image Source: Zacks Investment Research
Factors Narrating TSCO’s Growth Story
Tractor Supply is firmly focused on integrating its physical and digital operations to offer consumers a seamless shopping experience. TSCO’s omni-channel investments, including the curbside pickup, same day, next-day delivery, a re-launched website and a new mobile app contributed to the digital sales growth in the fourth quarter. TSCO witnessed solid double-digit sales growth in its e-commerce business, delivering the 38th consecutive quarter of increase. Its mobile app has more than 2 million downloads and accounts for above 10% of the e-commerce sales.
Tractor Supply’s Neighbor's Club loyalty program has been performing well for a while, with a year-over-year membership increase of 24%. TSCO exited the fourth quarter with above 23.6 million Neighbor's Club members. These members are presently representing roughly 70% of the sales under Neighbor's Club. Going forward, management is likely to reach more than $2 billion in sales by 2026.
TSCO is progressing well with its Life Out Here Strategy, based on its five key pillars, including customers, digitization, execution, team members and a total shareholder return. Earlier, Tractor Supply launched the Field Activity Support Team (FAST) and implemented various technology and service enhancements across the enterprise. TSCO is also on track with its Project Fusion remodels and a Side Lot transformation to remain nationally strong and locally relevant by bringing the latest merchandising strategies to life. Management anticipates transforming the side lots in approximately 100 locations during 2022. These are significant investments toward stores and are expected to boost productivity across the existing and the new stores.
As part of these efforts, management revised the long-term financial growth targets for 2022-2026. It envisions achieving net sales growth of 6-7% for the aforementioned period, while comps are expected to grow 4-5%. The operating margin is expected to be 10.1-10.6%, up from the earlier mentioned 9-9.5%. Earnings per share are likely to grow 8-11%, hinting at an increase from the previously guided 8-10% growth.
Tractor Supply is also on track with its store-opening initiatives to woo traffic and drive the top line. In the December quarter, TSCO opened 36 Tractor Supply stores and one Petsense store. It plans to open 75-80 Tractor Supply stores and 10 Petsense stores in 2022.
Headwinds to Overcome
TSCO is currently reeling under higher product cost inflation, rising transportation costs and an unfavorable product mix. This, along with costs related to increased investments in the Life Out Here strategy and supply-chain constraints remain concerns. Increased wage rates and additional store labor hours also act as deterrents.
Conclusion
Although higher costs and supply-chain issues remain woes, we believe that strategic initiatives, a solid online show and high demand are likely to help sustain Tractor Supply’s momentum in the days ahead.
The Zacks Consensus Estimate for TSCO’s 2022 sales and earnings per share (EPS) suggests growth of 8.1% and 8.9% each from the respective year-ago reported figures. The consensus mark for 2022 earnings has moved 2% north over the past 30 days to $9.38. Also, a long-term earnings growth rate of 9.8% and a VGM Score of B drive optimism.
Other Stocks to Consider
Here are three other top-ranked stocks to consider, namely Nordstrom (JWN - Free Report) , Tapestry (TPR - Free Report) and Target (TGT - Free Report) .
Nordstrom presently sports a Zacks Rank #1 (Strong Buy). JWN has a trailing four-quarter earnings surprise of 13.9%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Nordstrom’s current financial-year sales and EPS suggests growth of 5.7% and 180%, respectively, from the year-ago period’s corresponding reported numbers. JWN has an expected EPS growth rate of 6% for three-five years.
Tapestry presently has a Zacks Rank of 2. The company has a trailing four-quarter earnings surprise of 28.2%, on average.
The Zacks Consensus Estimate for Tapestry’s current financial-year sales and EPS suggests growth of 17.5% and 22.9% each from the respective year-ago period’s reported numbers. TPR has an expected EPS growth rate of 12.5% for three-five years.
Target is currently Zacks #2 Ranked. TGT has a trailing four-quarter earnings surprise of 21.3%, on average.
The Zacks Consensus Estimate for Target’s current financial-year sales and EPS suggests growth of 3.5% and 6.7%, respectively, from the year-ago period’s corresponding reported figures. TGT has an expected EPS growth rate of 16.5% for three-five years.