Back to top

Tractor Supply (TSCO) Looks Bullish: What's Aiding the Stock?

Read MoreHide Full Article

Tractor Supply Company (TSCO - Free Report) stock has been a consistent gainer, courtesy of its robust surprise trend, store growth initiatives, ONETractor plan, effective inventory management and investments in everyday businesses. Moreover, the company is benefiting from its sturdy omni-channel efforts.

This led to an upsurge in the stock price, which also hovers close to its 52-week high. In the last three months, this Zacks Rank #2 (Buy) company has increased 17.7%, outperforming the industry’s 12.9% rise. Additionally, this leading rural lifestyle retail store chain has gained 10.8% since Jul 26, following the robust second-quarter 2018 results and an optimistic view for 2018.



Notably, the momentum of the stock has remained intact after Tractor Supply reported impressive second-quarter 2018 results, characterized by increased profits, comps growth and higher sales. Notably, second-quarter 2018 marked the company’s third earnings and sales beat in the last four quarters. Following the solid quarterly results, management raised its outlook for 2018.

Tractor Supply Company Price, Consensus and EPS Surprise

 

Tractor Supply Company Price, Consensus and EPS Surprise | Tractor Supply Company Quote


Estimate Trend Up

Driven by the robust view for 2018, analysts are becoming optimistic about the stock. This is quite evident from the uptrend in earnings estimates in the last 30 days. The Zacks Consensus Estimate of $4.19 and $4.60 for 2018 and 2019 moved north by 1 cent and 2 cents, respectively. The company envisions earnings per share of $4.10-$4.20, up from $3.95-$4.15 projected previously and $3.33 recorded in 2017. Comps growth is anticipated to be 3-3.5%, with net sales of $7.77-$7.80 billion.

Strategies Supporting Tractor Supply’s Growth

Tractor Supply’s initiatives including the expansion of store base and incorporation of technological advancements to induce traffic, are key revenue drivers. The company remains on track to attain its long-term domestic store growth target of 2,500. In second-quarter 2018, Tractor Supply opened 25 namesake stores and three Petsense stores. Year to date, it launched 40 namesake and seven Petsense stores, thus, remaining on track to reach its target of opening 80 flagship stores and 20 Petsense stores in 2018.

Additionally, Tractor Supply is focused on integrating its physical and digital operations to offer consumers a seamless shopping experience. The company’s “ONETractor” initiative, which is aimed at connecting store and online shopping, is a step in this direction. Consequently, the company is reaping significant benefits from its ‘Buy Online Pick Up in Store’ program while it continues to expand its Neighbor’s Club customer rewards program. Management expects both of these strategies to play a major role in boosting the top line. It also expects long-term results to benefit from its mobile POS and stockyard initiatives.

Further, Tractor Supply expects to balance investments between new store growth and ONETractor initiative, alongside investing in everyday businesses in 2018, in order to provide a seamless experience to the customers.

Over the years, the company has gained from its focus on efficiently managing its inventories to minimize the impact of weather on its business and capitalize on seasonal demand. With regard to this, it is focusing on the enhancement of IT systems and supply chain. It is on track with its constant investments in new systems, including demand planning, improved pricing, inventory allocation, all of which are directed toward generating supply chain efficiencies in order to better manage global inventories. Additionally, it remains focused on the execution of its digital priorities, lending the support needed to bolster growth at its merchandising, customer facing and logistics capabilities.

Based on the above-mentioned factors, we believe that Tractor Supply has significant growth potential in the days ahead. This is also evident from the company’s long-term earnings growth rate of 12.8% and a VGM Score of A.

Looking for More Trending Picks? Look at These

Some other top-ranked stocks in the same industry are DICK’S Sporting Goods Inc. (DKS - Free Report) , Five Below Inc. (FIVE - Free Report) and The Michaels Companies Inc. (MIK - Free Report) , each sporting a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DICK’S Sporting has gained 19.2% in the last three months. The company has long-term earnings growth rate of 10%.

Five Below has long-term EPS growth rate of 28%. Further, the stock has gained a whopping 62.1% in the last three months.

Michaels Companies has grown nearly 9.7% in the last three months. Moreover, the company has long-term EPS growth rate of 7.7%.

Today's Stocks From Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6% and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>



More from Zacks Analyst Blog

You May Like