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Will Tractor Supply's (TSCO) Growth Plans Drive Q3 Earnings?

Tractor Supply Company TSCO is slated to report third-quarter 2018 results on Oct 25. Notably, the company has delivered an earnings beat in three of the trailing four quarters, with an average positive surprise of 3.4%.

The Zacks Consensus Estimate for the third quarter is pegged at 86 cents, up about 19.4% year over year. Estimates have been stable over the past 30 days.

Tractor Supply Company Price, Consensus and EPS Surprise

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

Let’s see how things are shaping up prior to this announcement.

Factors Likely to Impact 3Q18

Tractor Supply is benefiting from its solid store-growth initiatives, ONETractor plan and investment in everyday businesses. Also, its robust omni-channel efforts and rewards program are commendable. The company remains focused on integrating its physical and digital operations to offer consumers a seamless shopping experience.

These apart, Tractor Supply’s “ONETractor” initiative aimed at connecting store and online shopping proved conducive to the company. Currently, it is significantly gaining from the Buy Online Pick Up in Store program and Neighbor’s Club loyalty program. Moreover, the company is witnessing solid comparable-store sales (comps), courtesy of strength across all geographic regions and major product categories.

Additionally, management has been expanding the Petsense stores and intends to open nearly 20 stores this year. Tractor Supply is expected to benefit from the impressive growth history and network of Petsense alongside leveraging its existing pets business. Meanwhile, it is progressing well with the integration of Petsense acquisition.

All these strategies are expected to drive the company’s top line and overall profitability in the upcoming quarter. Analysts polled by Zacks expect revenues of $1,824 million, up 5.8% from the year-ago quarter.

However, increased selling, general and administrative expenses due to higher incentive compensation and investments in infrastructure and technology might dent the company’s margins. Also, stiff competition in the industry and volatility in raw material prices are worrisome.

Nevertheless, Tractor Supply is working to strike a balance between initiatives and investments in stores and distribution centers, with strict cost disciplines and operational efficiencies. These are likely to minimize expenses and boost profits. Further, we remain optimistic about the company’s strategies to drive third-quarter results.

Zacks Model

Our proven model conclusively shows that Tractor Supply is likely to beat estimates in the third quarter. This is because a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for this to happen. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Tractor Supply has an Earnings ESP of +0.78% and a Zacks Rank #2, making us pretty confident about earnings beat.

Other Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these too have the right combination of elements to beat estimates:

Boot Barn Holdings, Inc. BOOT has an Earnings ESP of +3.70% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

DICK'S Sporting Goods, Inc. DKS has an Earnings ESP of +9.61% and a Zacks Rank of 2.

The Michaels Companies, Inc. MIK has an Earnings ESP of +3.41% and a Zacks Rank #3.

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