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Why Tractor Supply (TSCO) Q2 Earnings Are Poised to Grow

Tractor Supply Company TSCO is slated to release second-quarter 2019 results on Jul 25, before the opening bell. Notably, the company’s earnings surpassed estimates in the trailing four quarters, the average being 7.44%. Let’s see how things are placed for this leading rural lifestyle retailer company’s upcoming earnings release.

Estimates Look Bright

The Zacks Consensus Estimate for second-quarter earnings has been stable in the past 30 days at $1.81 per share. The figure indicates a rise of 7.1% from earnings delivered in the year-ago quarter.

The consensus mark for revenues is pegged at $2,346 million, suggesting an improvement of approximately 6% from the year-ago quarter.

Tractor Supply Company Price, Consensus and EPS Surprise

Factors to Consider

Tractor Supply’s earnings are benefiting from its solid growth initiatives including robust store-growth and omni-channel efforts. Additionally, the company’s focus on integrating its physical and digital operations to offer consumers a seamless shopping experience has been aiding top-line performance. Also, it remains on track with its “ONETractor” initiative that is aimed at connecting store and online shopping. It is also reaping significant benefits from its Buy Online Pick Up in Store program. Meanwhile, it continues to expand its Neighbor’s Club loyalty program, surpassing its targeted membership growth goals in 2018. We expect all of these strategies to drive performance in the forthcoming quarterly results.

Further, Tractor Supply leverages an extensive network of stores to penetrate into target markets. This initiative forms the basis of its store expansion strategy. This, in turn, enables the company to generate incremental sales and gain market share. Markedly, it is well positioned to increase its domestic store to 2,500 in the long term. In first-quarter 2019, it opened 10 namesake stores and expects to introduce about 80 namesake stores this year. Consistency of such trends is likely to augment sales during the second-quarter 2019.

Backed by increased traffic due to the aforementioned initiatives, the company is witnessing solid comparable store sales (comps) growth trend. Improvement across all geographic regions and major product categories coupled with strength in everyday merchandise such as consumable, usable and edible products are also aiding comps growth. For the second quarter, management remains confident about benefiting from the spring selling season. The Zacks Consensus Estimate for second-quarter comps suggests an increase of 2.9% from a year ago.
Although Tractor Supply remains committed toward enhancing its business via store-growth and omni-channel initiatives, higher investments in infrastructure and technology remain a concern. This, along with higher transportation costs and negative mix may weigh on the company’s margins. Soft margins may partly hurt bottom-line performance in the second quarter.

What Does the Zacks Model Say?

Our proven model does not conclusively show that Tractor Supply is likely to beat bottom-line estimates this quarter. For this to happen, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold). You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Though Tractor Supply carries a Zacks Rank #2, an Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks With Favorable Combination

L Brands, Inc. LB has an Earnings ESP of +0.89% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

The TJX Companies, Inc. TJX has an Earnings ESP of +4.00% and a Zacks Rank #2.

Burlington Stores, Inc. BURL has an Earnings ESP of +4.80% and a Zacks Rank #3.

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