Tractor Supply Company (TSCO Quick QuoteTSCO - Free Report) has been witnessing a solid run on the bourses, owing to the robust e-commerce business, strong demand and strategic growth endeavors. The Zacks Rank #2 (Buy) company has gained 4.9% in the past year against the industry and the Retail-Wholesale sector’s declines of 28.5% and 28.2%, respectively.

Additionally, an uptrend in the Zacks Consensus Estimate echoes the same sentiment. The Zacks Consensus Estimate for Tractor Supply’s 2022 sales and EPS suggests growth of 8.8% and 10.2%, respectively, from the year-ago period’s reported numbers. Earnings estimates for the current financial year have increased 1.8% to $9.49 over the past 30 days.

Let’s Delve Deeper

Tractor Supply has been gaining from strength in the Life Out Here Strategy and healthy demand for its product categories. Sturdy demand for everyday merchandise, including consumable, usable and edible products, as well as robust winter seasonal categories, bode well. Driven by this, it posted impressive first-quarter 2022 results wherein both top and bottom lines improved year over year and surpassed the Zacks Consensus Estimate. This marked the ninth straight quarter of earnings surprise and the eighth consecutive sales beat.

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Given the changing consumer trends, the company remains focused on integrating its physical and digital operations to offer consumers a seamless shopping experience. It is on track with the ‘ONETractor’ strategy to connect store and online shopping. The company’s omni-channel investments include curbside pickup, same-day and next-day delivery, a re-launched website, and the new mobile app.

It witnessed solid double-digit sales growth in the e-commerce business, delivering the 39th consecutive quarter of an increase. Its mobile app has more than 3 million downloads and accounts for above 15% of e-commerce sales. The company’s Neighbor's Club loyalty program remains sturdy, with a year-over-year membership increase of 24%. Tractor Supply exited the first quarter, with 24.8 million Neighbor's Club members. Management is likely to reach more than $2 billion in sales by 2026.

The company is progressing well with its Life Out Here Strategy, which is based on five key pillars — customers, digitization, execution, team members and total shareholder return. Earlier, the company launched the Field Activity Support Team (“FAST”) and implemented various technology and service enhancements across the enterprise.

Tractor Supply is also on track with Project Fusion remodels and 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 100 locations in 2022. These have been significant investments toward stores and are expected to boost productivity across the existing and 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%, up from the previously stated 8-10%.

Tractor Supply also remains on track with its store-opening initiatives to induce traffic and drive the top line. It plans to open 75-80 Tractor Supply stores and 10 Petsense stores in 2022.

Consequently, management expects net sales of $13.6-$13.8 billion for 2022. Comps are likely to grow 3-4.5%. The operating margin is anticipated to be 10.1-10.3%. Net income is expected to be $1.04-$1.08 billion. Earnings per share are likely to be $9.20-$9.50. The view does not include the impacts of the Orscheln Farm acquisition as it is currently subjected to customary closing conditions. The 2022 guidance includes an additional week or 53rd week, which is likely to contribute to sales and earnings to the tune of 1.5 percentage points and 15 cents, respectively.

Bottom Line

Despite product cost inflation, higher transportation costs and supply-chain constraints, we believe that online strength, solid demand and well-chalked-out endeavors are likely to help the stock sustain its stellar show. Also, a long-term earnings growth rate of 9.8% reflects its inherent strength.

Other Stocks to Consider

Here are three other top-ranked stocks to consider — Ross Stores (ROST Quick QuoteROST - Free Report) , Signet Jewelers (SIG Quick QuoteSIG - Free Report) and Target Corporation (TGT Quick QuoteTGT - Free Report) .

Ross Stores operates as an off-price retailer of apparel and home accessories primarily in the United States. It presently has a Zacks Rank #2. ROST has a trailing four-quarter earnings surprise of 33.3%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and EPS suggests growth of 5% and 3.9%, respectively, from the year-ago period’s reported numbers.

Signet Jewelers, the retailer of diamond jewelry, watches and other products, presently has a Zacks Rank #2. SIG has a trailing four-quarter earnings surprise of 73.8%, on average.

Although the Zacks Consensus Estimate for Signet Jewelers’ current financial-year sales suggests growth of 5.2%, its EPS reflects a decline of 8.2%, respectively, from the year-ago period’s reported numbers.

Target Corporation, which provides an array of goods ranging from household essentials and electronics to toys and apparel for men, women and kids, currently carries a Zacks Rank #2. TGT has a trailing four-quarter earnings surprise of 21.3%, on average.

The Zacks Consensus Estimate for Target Corporation’s current financial-year sales and EPS suggests growth of 3.7% and 7.3%, respectively, from the year-ago period’s reported figures.