We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Tractor Supply (TSCO) Q3 Earnings Beat Estimates, Sales Miss
Read MoreHide Full Article
Tractor Supply Company (TSCO - Free Report) has posted third-quarter 2022 results, wherein the bottom line surpassed the Zacks Consensus Estimate, while the top line lagged the same. Both metrics improved year over year.
Despite the inflationary pressure, the results have gained from continued market share, strength in the Life Out Here Strategy and healthy demand for its product categories. Consequently, management has raised its 2022 view to reflect the recent acquisition of Orscheln Farm and Home, which is likely to contribute $75 million to sales in the fourth quarter and 2022.
Despite the impressive results and the raised 2022 view, the TSCO stock rose more than 1% in the pre-market trading session on Oct 20. However, shares of the company have lost 16.6% year to date but came ahead of the industry’s 42% decline.
Image Source: Zacks Investment Research
Q3 Details
Tractor Supply’s earnings of $2.10 per share improved 7.7% year over year, beating the Zacks Consensus Estimate of $2.09.
Net sales jumped 8.4% year over year to $3,270.8 million but missed the Zacks Consensus Estimate of $3,284 million. The improvement was driven by an increase of 5.7% in comps, led by growth of 7% in comparable average tickets, which offset a 1.3% decline in comparable average transaction count.
Also, a sturdy demand for everyday merchandise, including consumable, usable and edible products, as well as year-round products, contributed to comps growth.
The gross profit rose 7.4% year over year to $1,165.8 million, while the gross margin contracted 32 basis points (bps) to 35.6%. Pricing efforts and other initiatives to drive margins partly offset cost inflation, higher transportation costs and the unfavorable product mix.
Selling, general and administrative (SG&A) expenses, including depreciation and amortization, as a percentage of sales, expanded 16 bps to 26.3%. In dollar terms, SG&A expenses, including depreciation and amortization, rose 9% year over year to $859.4 million. Investments in strategic efforts, and hourly wages and benefits were partly offset by normalized incentives, reduced COVID-19 response costs, and leverage in occupancy and other costs.
The operating income advanced 3.1% year over year to $306.4 million in the third quarter. Meanwhile, the operating margin contracted 48 bps to 9.4%.
Financial Position
Tractor Supply ended the third quarter with cash and cash equivalents of $211.2 million, long-term debt of $1,077.9 million, and total stockholders’ equity of $1,941.1 million.
In the nine months ending Sep 24, 2022, the company incurred a capital expenditure of $451.2 million and generated a cash flow from operating activities of $626.3 million. Capital expenditure is expected to be $650-$700 million for 2022.
In the third quarter, Tractor Supply returned $225.5 million to its shareholders, including $123.6 million to repurchase 0.6 million shares and $101.9 million as quarterly cash dividends.
Store Update
In the quarter under review, the company opened 11 Tractor Supply stores and two Petsense stores. As of Sep 24, 2022, it operated 2,027 Tractor Supply stores across 49 states and 180 Petsense stores in 23 states. On Oct 12, TSCO acquired 81 stores from Orscheln Farm and Home, which will be rebranded as Tractor Supply by the end of 2023.
Management remains on track with its store-opening initiatives. It plans to open 60-70 Tractor Supply stores and 10 Petsense stores in 2022.
Tractor Supply Company Price, Consensus and EPS Surprise
Driven by the solid quarterly results, the Zacks Rank #2 (Buy) company has raised its guidance for 2022. The company expects net sales of $14.06-$14.12 billion, up from the prior mentioned $13.95-$14.05 billion. Comps are likely to grow 5.4-5.8%, up from earlier stated 5.2-5.8% growth.
The operating margin is anticipated to be 10.1-10.15% compared with the previously stated 10.2%. Net income is expected to be $1.07-$1.08, up from the previously communicated $1.065-$1.085 billion. Earnings per share are likely to be $9.55-$9.63, up from the earlier mentioned $9.48-$9.60. The view also includes the gains from the 53rd week in 2022, which is expected to contribute 1.5 percentage points to the top line and 15 cents to the bottom line.
Ulta Beauty, which operates as a retailer of beauty products, currently sports a Zacks Rank #1 (Strong Buy). ULTA has a trailing four-quarter earnings surprise of 32.8%, on average. ULTA has an expected EPS growth rate of 11.9% for three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year sales suggests growth of 13.7% from the year-ago reported number.
Kroger, a renowned grocery retailer, currently carries a Zacks Rank #2. KR has an expected EPS growth rate of 11.7% for three to five years.
The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 7.8% and 9.8%, respectively, from the year-ago reported figures. KR has a trailing four-quarter earnings surprise of 15.7%, on average.
DICK'S Sporting, which operates as a sporting goods retailer, carries a Zacks Rank #2 at present. The company has a trailing four-quarter earnings surprise of nearly 21.4%, on average.
The Zacks Consensus Estimate for DICK'S Sporting’s current financial year’s revenues and EPS suggests declines of 3.2% and 27.3%, respectively, from the year-ago reported figures. DKS has an expected EPS growth rate of 5% for three to five years.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Tractor Supply (TSCO) Q3 Earnings Beat Estimates, Sales Miss
Tractor Supply Company (TSCO - Free Report) has posted third-quarter 2022 results, wherein the bottom line surpassed the Zacks Consensus Estimate, while the top line lagged the same. Both metrics improved year over year.
Despite the inflationary pressure, the results have gained from continued market share, strength in the Life Out Here Strategy and healthy demand for its product categories. Consequently, management has raised its 2022 view to reflect the recent acquisition of Orscheln Farm and Home, which is likely to contribute $75 million to sales in the fourth quarter and 2022.
Despite the impressive results and the raised 2022 view, the TSCO stock rose more than 1% in the pre-market trading session on Oct 20. However, shares of the company have lost 16.6% year to date but came ahead of the industry’s 42% decline.
Image Source: Zacks Investment Research
Q3 Details
Tractor Supply’s earnings of $2.10 per share improved 7.7% year over year, beating the Zacks Consensus Estimate of $2.09.
Net sales jumped 8.4% year over year to $3,270.8 million but missed the Zacks Consensus Estimate of $3,284 million. The improvement was driven by an increase of 5.7% in comps, led by growth of 7% in comparable average tickets, which offset a 1.3% decline in comparable average transaction count.
Also, a sturdy demand for everyday merchandise, including consumable, usable and edible products, as well as year-round products, contributed to comps growth.
The gross profit rose 7.4% year over year to $1,165.8 million, while the gross margin contracted 32 basis points (bps) to 35.6%. Pricing efforts and other initiatives to drive margins partly offset cost inflation, higher transportation costs and the unfavorable product mix.
Selling, general and administrative (SG&A) expenses, including depreciation and amortization, as a percentage of sales, expanded 16 bps to 26.3%. In dollar terms, SG&A expenses, including depreciation and amortization, rose 9% year over year to $859.4 million. Investments in strategic efforts, and hourly wages and benefits were partly offset by normalized incentives, reduced COVID-19 response costs, and leverage in occupancy and other costs.
The operating income advanced 3.1% year over year to $306.4 million in the third quarter. Meanwhile, the operating margin contracted 48 bps to 9.4%.
Financial Position
Tractor Supply ended the third quarter with cash and cash equivalents of $211.2 million, long-term debt of $1,077.9 million, and total stockholders’ equity of $1,941.1 million.
In the nine months ending Sep 24, 2022, the company incurred a capital expenditure of $451.2 million and generated a cash flow from operating activities of $626.3 million. Capital expenditure is expected to be $650-$700 million for 2022.
In the third quarter, Tractor Supply returned $225.5 million to its shareholders, including $123.6 million to repurchase 0.6 million shares and $101.9 million as quarterly cash dividends.
Store Update
In the quarter under review, the company opened 11 Tractor Supply stores and two Petsense stores. As of Sep 24, 2022, it operated 2,027 Tractor Supply stores across 49 states and 180 Petsense stores in 23 states. On Oct 12, TSCO acquired 81 stores from Orscheln Farm and Home, which will be rebranded as Tractor Supply by the end of 2023.
Management remains on track with its store-opening initiatives. It plans to open 60-70 Tractor Supply stores and 10 Petsense stores in 2022.
Tractor Supply Company Price, Consensus and EPS Surprise
Tractor Supply Company price-consensus-eps-surprise-chart | Tractor Supply Company Quote
2022 Outlook
Driven by the solid quarterly results, the Zacks Rank #2 (Buy) company has raised its guidance for 2022. The company expects net sales of $14.06-$14.12 billion, up from the prior mentioned $13.95-$14.05 billion. Comps are likely to grow 5.4-5.8%, up from earlier stated 5.2-5.8% growth.
The operating margin is anticipated to be 10.1-10.15% compared with the previously stated 10.2%. Net income is expected to be $1.07-$1.08, up from the previously communicated $1.065-$1.085 billion. Earnings per share are likely to be $9.55-$9.63, up from the earlier mentioned $9.48-$9.60. The view also includes the gains from the 53rd week in 2022, which is expected to contribute 1.5 percentage points to the top line and 15 cents to the bottom line.
Other Stocks to Consider
Here are three other top-ranked stocks to consider — Kroger (KR - Free Report) , DICK’S Sporting Goods (DKS - Free Report) and Ulta Beauty (ULTA - Free Report) .
Ulta Beauty, which operates as a retailer of beauty products, currently sports a Zacks Rank #1 (Strong Buy). ULTA has a trailing four-quarter earnings surprise of 32.8%, on average. ULTA has an expected EPS growth rate of 11.9% for three to five years. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ulta Beauty’s current financial-year sales suggests growth of 13.7% from the year-ago reported number.
Kroger, a renowned grocery retailer, currently carries a Zacks Rank #2. KR has an expected EPS growth rate of 11.7% for three to five years.
The Zacks Consensus Estimate for Kroger’s current financial-year revenues and EPS suggests growth of 7.8% and 9.8%, respectively, from the year-ago reported figures. KR has a trailing four-quarter earnings surprise of 15.7%, on average.
DICK'S Sporting, which operates as a sporting goods retailer, carries a Zacks Rank #2 at present. The company has a trailing four-quarter earnings surprise of nearly 21.4%, on average.
The Zacks Consensus Estimate for DICK'S Sporting’s current financial year’s revenues and EPS suggests declines of 3.2% and 27.3%, respectively, from the year-ago reported figures. DKS has an expected EPS growth rate of 5% for three to five years.