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Can Tractor Supply's Efforts Sustain Stock Momentum in 2019?

Tractor Supply Company TSCO exhibited a bull run in 2018, thanks to its robust omni-channel capabilities and superb surprise history. The company remains committed toward the integration of physical and digital operations through the “ONETractor” initiative. Notably, it has delivered earnings and sales beat in four of the trailing five quarters.

A glimpse of the company’s price trend reveals that it has outperformed the industry in a year’s time. Shares of this leading rural lifestyle retailer have rallied 5.5% against the industry’s 0.7% decline. Moreover, this Zacks Rank #2 (Buy) stock displays a VGM Score of A and has an expected long-term earnings growth rate of 12.2%.



The Zacks Consensus Estimate of $1.09 for fourth-quarter 2018 earnings, which is slated to release in the next few weeks, inched up 0.9% over the past 30 days. Additionally, management is confident about ending 2018 on a solid note, courtesy of solid growth initiatives as well as higher sales, comparable store sales (comps) and profitability.

For 2018, Tractor Supply projects net sales in the band of $7.84-$7.87 billion, up from $7.26 billion recorded in 2017. Comps are anticipated to grow 4-4.5% compared with 2.7% improvement registered last year. Earnings per share are envisioned in the band of $4.23-$4.27, which reflects a sharp increase from $3.33 earned in 2017.

Let’s Take a Look at Tractor Supply’s Initiatives

Tractor Supply is significantly benefiting from its ‘Buy Online Pick Up in Store’ and ‘Neighbor’s Club’ customer rewards program. In the third quarter of 2018, the company marked its 25th straight quarter of double-digit e-commerce sales growth. Going forward, management expects the mobile POS and stockyard initiatives to drive the company’s top line and profitability.

In addition, Tractor Supply remains well on track to accomplish its long-term domestic store growth target of 2,500 stores. In the nine months of 2018, it introduced 63 namesake and 14 Petsense stores besides closing one Petsense store. In 2018, management expects to open 80 flagship and 20 Petsense stores.

Tractor Supply’s Petsense acquisition, which complements the company’s existing pets business, is also contributing to results. The company is progressing well with the integration of Petsense, which is likely to help the company strengthen its foothold in the flourishing pet market. Tractor Supply is also on track to launch a premium dog and cat food brand, True Source, in its Petsense stores.

Although higher cost of investments toward infrastructure and technology is resulting in increased expenses, we expect Tractor Supply to minimize costs in the near term. In fact, management expects to strike a balance between initiatives and investments in stores and distribution centers besides incorporating strict cost disciplines and operational efficiencies.

With that said, we believe Tractor Supply will continue to witness sturdy momentum this year on the back of store-growth efforts, technological advancements and other aforementioned strategic initiatives.

Interested in Retail Space? Count on These

Sally Beauty Holdings, Inc. SBH delivered average positive earnings surprise of 1.3% in the last four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

DICK’S Sporting Goods, Inc. DKS, carrying a Zacks Rank of 2, has outpaced the earnings estimates in each of the trailing four quarters by an average of 25.5%.

The Michaels Companies, Inc. MIK is also a Zacks Ranked #2 stock. It has an expected long-term earnings growth rate of 8.7%.

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Tractor Supply Company (TSCO): Free Stock Analysis Report
 
DICK'S Sporting Goods, Inc. (DKS): Free Stock Analysis Report
 
Sally Beauty Holdings, Inc. (SBH): Free Stock Analysis Report
 
The Michaels Companies, Inc. (MIK): Free Stock Analysis Report
 
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