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Can Tractor Supply (TSCO) Keep Its Earnings Beat Trend in Q1?

Tractor Supply Company TSCO is slated to report first-quarter 2021 results on Apr 22, before the opening bell. The leading ranch store retailer is expected to have witnessed revenue and earnings growth in the to-be-reported quarter.

The Zacks Consensus Estimate for first-quarter earnings is pegged at 96 cents per share, suggesting an increase of 35.2% from the year-ago period’s reported figure. Notably, the consensus mark has been raised by a penny in the past 30 days. For first-quarter revenues, the consensus mark is pegged at $2.43 billion, suggesting 23.8% growth from the prior-year quarter’s reported figure.

In the last reported quarter, the company reported an earnings beat of 7.9%. Moreover, it delivered an earnings surprise of 9.4%, on average, in the trailing four quarters.

Tractor Supply Company Price and EPS Surprise


Tractor Supply Company price-eps-surprise | Tractor Supply Company Quote

Factors to Note

Tractor Supply has been benefiting from the robust demand for seasonal categories and everyday merchandise, including consumable, usable and edible products, particularly in the online platform. Additionally, its focus on its growth initiatives, which include the expansion of store base and incorporation of technological advancements to induce traffic and drive the top line, bodes well.

The company’s omni-channel investments, including curbside pickup, same-day and next-day delivery, a relaunched website, and a new mobile app, have been aiding its top-line growth. Moreover, Buy Online Pickup in Store and Ship to Store services have been acting as growth drivers.

Also, the company has been witnessing higher conversions, which have been aiding digital sales to a large extent. In 2020, about 75% of its omni-channel sales were picked up at a Tractor Supply store, reinforcing the importance of its stores to customers. Moreover, its newly launched mobile app as well as the Neighbor's Club loyalty program bodes well.

Moreover, the company has been progressing well with the expansion of its store base and the incorporation of technological advancements to induce traffic and drive the top line. Its sales and comps have been considerably gaining from the addition of stores so far. Also, the rollout of capabilities like stockyard in-store kiosk and mobile point-of-sale (PoS) in all its stores along with the enhancement of the Tractor Supply credit card offering and investments in its supply chain bodes well.

Further, the company remains on track with its ‘ONETractor’ strategy, which is aimed at connecting stores and online shopping. Backed by the initiative, it has been driving growth, building customer-centric engagement, offering suitable products and services, and reinforcing core infrastructure capabilities. Also, Tractor Supply has been on track to build upon its Out Here lifestyle strategy aimed at boosting space productivity, enhancing omnichannel initiatives, evolving the Neighbor’s Club loyalty program and augmenting in-store merchandising execution. Gains from the initiatives are likely to get reflected in the company’s first-quarter 2021 results.

However, Tractor Supply has been witnessing higher SG&A expenses, driven by incremental costs related to the pandemic, elevated incentive compensation due to robust sales and profit performance, and investments in strategic initiatives. Further, the unexpected resurgence of COVID-19 cases in late 2020 has led to incremental COVID-related costs. This is expected to have continued in the quarter under review.

On the last reported quarter’s earnings call, management anticipated costs related to the pandemic to continue to remain at elevated levels. Notably, the leverage from reduced COVID-related costs and more normalized incentive compensation is expected to have been offset by the ongoing wage pressures, investments in supply chain and digital space, and higher depreciation and amortization expenses.

What the Zacks Model Unveils

Our proven model predicts 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Tractor Supply has a Zacks Rank #2 and an Earnings ESP of +6.42%.

Other Stocks Poised to Beat Earnings Estimates

Here are some other companies you may want to consider, as our model shows that these too have the right combination of elements to post an earnings beat.

MarineMax, Inc. HZO currently has an Earnings ESP of +14.55% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Yum Brands, Inc. YUM has an Earnings ESP of +3.67% and a Zacks Rank #2 at present.

Dillard’s, Inc. DDS currently has an Earnings ESP of +6.49% and a Zacks Rank #3.

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