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Factors to Note Ahead of Tractor Supply's (TSCO) Q2 Earnings
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Tractor Supply Company (TSCO - Free Report) is likely to register increases in the top and bottom lines when it reports second-quarter 2023 results on Jul 27, before market open. The Zacks Consensus Estimate for revenues is pegged at $4,282 million, indicating 9.7% growth from the prior-year reported figure.
The bottom line of the largest rural lifestyle retailer in the United States is expected to have increased year over year. The Zacks Consensus Estimate for earnings per share for the second quarter has moved down by 1.3% to $3.93 in the past 30 days. However, the figure suggests growth of 11.3% from the year-ago period’s reported figure.
Tractor Supply has a trailing four-quarter earnings surprise of 0.5%, on average. In the last reported quarter, this Brentwood, TN-based company’s earnings missed the Zacks Consensus Estimate by 2.4%.
Tractor Supply has been grappling with inflationary pressure and rising costs for a while now. For instance, in the first quarter of 2023, its cost of merchandise sold and selling, general and administrative expenses (SG&A) increased by 8.2% and 12.7%, respectively, on a year-over-year basis. SG&A expenses, including depreciation and amortization, as a percentage of sales expanded 119 basis points (bps) year over year to 28.1% in the quarter.
Higher costs, including elevated transaction expenses and integration costs related to the Orscheln Farm and Home acquisition, are expected to have hurt its margins and profitability in the second quarter of 2023. The company’s high capital expenditures related to its investments in new distribution centers and other growth initiatives might have impacted its margin performance.
We anticipate Tractor Supply’s operating margin to contract by 10 bps in the second quarter. The company is likely to have witnessed an increase in SG&A expenses, weighing on its operating margin. Our model indicates an 11.6% increase in SG&A expenses on a year-over-year basis, with a 30-bps increase in the SG&A rate.
The company’s high-debt profile might have also been a concern. Exiting the first quarter, its long-term debt (including finance lease liabilities) was $1,164.1 million, reflecting an increase of 37.6% on a sequential basis. The rise in debt levels might have increased the company’s financial obligations and hurt its performance.
However, the company has been benefiting from continued market share growth and progress on its strategic initiatives. Sturdy demand for everyday merchandise, including consumable, usable and edible products, as well as year-round products, is likely to have driven its top-line performance in the quarter to be reported. Solid demand for CUE products and DIY categories is also likely to have boosted the company’s performance. We anticipate Tractor Supply’s comparable store sales to increase by 5.3% in the second quarter.
Tractor Supply has been focused on integrating its physical and digital operations to offer consumers a seamless shopping experience. The company has been on track with the ‘ONETractor’ strategy, which is aimed at connecting stores and online shopping. The company’s omnichannel investments include curbside pickup, same-day and next-day delivery, a re-launched website and a new mobile app. Gains from these efforts are expected to have led to strong e-commerce growth in the to-be-reported quarter.
It has been on track with the Project Fusion remodels and Side Lot transformation to remain nationally strong and locally relevant by bringing the latest merchandising strategies to life. These have been significant investments toward stores and are expected to have boosted productivity across the existing and new stores. TSCO’s Neighbor's Club loyalty program is also likely to have driven its sales in the to-be-reported 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.
Tractor Supply has a Zacks Rank #4 (Sell) and an Earnings ESP of -1.84%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Stocks Poised to Beat Earnings Estimates
Here are some companies that have the right combination of elements to post an earnings beat:
ABG is likely to register top- and bottom-line declines when it reports second-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.7 billion, suggesting a 6.4% decline from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for ABG’s fiscal second-quarter earnings is pegged at $8.04, suggesting a 19.9% decline from the reported figure in the year-ago quarter. The consensus estimate for earnings has declined by 2% in the past 30 days. ABG has delivered an earnings beat of 7.4%, on average, in the trailing four quarters.
Lowe’s Companies (LOW - Free Report) currently has an Earnings ESP of +0.10% and a Zacks Rank #3. The company is expected to register a top-line decline when it reports second-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for LOW’s quarterly revenues is pegged at $25 billion, which suggests a decline of 9% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Lowe’s earnings has increased 0.9% to $4.49 in the past 30 days. However, the consensus estimate for earnings suggests a decline of 3.9% from the year-ago quarter’s reported figure. LOW has delivered a bottom-line beat of 3.7%, on average, in the trailing four quarters.
Arhaus, Inc. (ARHS - Free Report) has an Earnings ESP of +7.69% and currently sports a Zacks Rank #1. ARHS is likely to register top-line growth when it reports second-quarter fiscal 2023, while its bottom line is expected to decline year-over-year. The Zacks Consensus Estimate for its quarterly revenues is pegged at $325.7 million, suggesting 6.3% growth from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for ARHS’ fiscal second-quarter earnings is pegged at 26 cents, suggesting a 7.1% decline from the reported figure in the year-ago quarter. The consensus estimate for earnings has been stable in the past 30 days. ARHS has delivered an earnings beat of 82.4%, on average, in the trailing four quarters.
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Factors to Note Ahead of Tractor Supply's (TSCO) Q2 Earnings
Tractor Supply Company (TSCO - Free Report) is likely to register increases in the top and bottom lines when it reports second-quarter 2023 results on Jul 27, before market open. The Zacks Consensus Estimate for revenues is pegged at $4,282 million, indicating 9.7% growth from the prior-year reported figure.
The bottom line of the largest rural lifestyle retailer in the United States is expected to have increased year over year. The Zacks Consensus Estimate for earnings per share for the second quarter has moved down by 1.3% to $3.93 in the past 30 days. However, the figure suggests growth of 11.3% from the year-ago period’s reported figure.
Tractor Supply has a trailing four-quarter earnings surprise of 0.5%, on average. In the last reported quarter, this Brentwood, TN-based company’s earnings missed the Zacks Consensus Estimate by 2.4%.
Tractor Supply Company Price and EPS Surprise
Tractor Supply Company price-eps-surprise | Tractor Supply Company Quote
Key Factors to Note
Tractor Supply has been grappling with inflationary pressure and rising costs for a while now. For instance, in the first quarter of 2023, its cost of merchandise sold and selling, general and administrative expenses (SG&A) increased by 8.2% and 12.7%, respectively, on a year-over-year basis. SG&A expenses, including depreciation and amortization, as a percentage of sales expanded 119 basis points (bps) year over year to 28.1% in the quarter.
Higher costs, including elevated transaction expenses and integration costs related to the Orscheln Farm and Home acquisition, are expected to have hurt its margins and profitability in the second quarter of 2023. The company’s high capital expenditures related to its investments in new distribution centers and other growth initiatives might have impacted its margin performance.
We anticipate Tractor Supply’s operating margin to contract by 10 bps in the second quarter. The company is likely to have witnessed an increase in SG&A expenses, weighing on its operating margin. Our model indicates an 11.6% increase in SG&A expenses on a year-over-year basis, with a 30-bps increase in the SG&A rate.
The company’s high-debt profile might have also been a concern. Exiting the first quarter, its long-term debt (including finance lease liabilities) was $1,164.1 million, reflecting an increase of 37.6% on a sequential basis. The rise in debt levels might have increased the company’s financial obligations and hurt its performance.
However, the company has been benefiting from continued market share growth and progress on its strategic initiatives. Sturdy demand for everyday merchandise, including consumable, usable and edible products, as well as year-round products, is likely to have driven its top-line performance in the quarter to be reported. Solid demand for CUE products and DIY categories is also likely to have boosted the company’s performance. We anticipate Tractor Supply’s comparable store sales to increase by 5.3% in the second quarter.
Tractor Supply has been focused on integrating its physical and digital operations to offer consumers a seamless shopping experience. The company has been on track with the ‘ONETractor’ strategy, which is aimed at connecting stores and online shopping. The company’s omnichannel investments include curbside pickup, same-day and next-day delivery, a re-launched website and a new mobile app. Gains from these efforts are expected to have led to strong e-commerce growth in the to-be-reported quarter.
It has been on track with the Project Fusion remodels and Side Lot transformation to remain nationally strong and locally relevant by bringing the latest merchandising strategies to life. These have been significant investments toward stores and are expected to have boosted productivity across the existing and new stores. TSCO’s Neighbor's Club loyalty program is also likely to have driven its sales in the to-be-reported 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.
Tractor Supply has a Zacks Rank #4 (Sell) and an Earnings ESP of -1.84%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.
Stocks Poised to Beat Earnings Estimates
Here are some companies that have the right combination of elements to post an earnings beat:
Asbury Automotive Group (ABG - Free Report) has an Earnings ESP of +9.43% and currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
ABG is likely to register top- and bottom-line declines when it reports second-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for its quarterly revenues is pegged at $3.7 billion, suggesting a 6.4% decline from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for ABG’s fiscal second-quarter earnings is pegged at $8.04, suggesting a 19.9% decline from the reported figure in the year-ago quarter. The consensus estimate for earnings has declined by 2% in the past 30 days. ABG has delivered an earnings beat of 7.4%, on average, in the trailing four quarters.
Lowe’s Companies (LOW - Free Report) currently has an Earnings ESP of +0.10% and a Zacks Rank #3. The company is expected to register a top-line decline when it reports second-quarter fiscal 2023 numbers. The Zacks Consensus Estimate for LOW’s quarterly revenues is pegged at $25 billion, which suggests a decline of 9% from the prior-year quarter’s reported figure.
The Zacks Consensus Estimate for Lowe’s earnings has increased 0.9% to $4.49 in the past 30 days. However, the consensus estimate for earnings suggests a decline of 3.9% from the year-ago quarter’s reported figure. LOW has delivered a bottom-line beat of 3.7%, on average, in the trailing four quarters.
Arhaus, Inc. (ARHS - Free Report) has an Earnings ESP of +7.69% and currently sports a Zacks Rank #1. ARHS is likely to register top-line growth when it reports second-quarter fiscal 2023, while its bottom line is expected to decline year-over-year. The Zacks Consensus Estimate for its quarterly revenues is pegged at $325.7 million, suggesting 6.3% growth from the figure reported in the prior-year quarter.
The Zacks Consensus Estimate for ARHS’ fiscal second-quarter earnings is pegged at 26 cents, suggesting a 7.1% decline from the reported figure in the year-ago quarter. The consensus estimate for earnings has been stable in the past 30 days. ARHS has delivered an earnings beat of 82.4%, on average, in the trailing four quarters.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.