2021 Is A New Era For Tractor Supply Company (NASDAQ:TSCO)

Friday, January 29, 2021 | Thomas Hughes
2021 Is A New Era For Tractor Supply Company (NASDAQ:TSCO)Tractor Supply Will Sustain Growth Into 2021

Tractor Supply Company (NASDAQ:TSCO) was one of the hottest names among the stay-at-home/play-at-home winnerslast year. The company is a modern-day general store for outdoor enthusiasts of all variety from hobby urban gardeners all the way through full-blown agricultural operators. The company’s sales were boosted first by the rush to stock up on items for the shut-down, later accelerated by the stimulus, and then again supported by social distancing, the flight-to-the-suburbs, and management’s own efforts.

Tractor Supply Company installed a new CEO not long before the pandemic struck and he’d already been turning the company around. His efforts included re-merchandising the stores, improving their appeal, building out an already-established eCommerce portal, and honing internal operations. His efforts are working, his name is Hal Lawton. If that sounds familiar it’s because he spent many years working for Home Depot and Macy’s in c-suite positions that set him up as the perfect CEO for this company.

Tractor Supply, What’s Not To Love About The Q4 Results?

Tractor Supply Company delivered the kind of earnings report the market was looking. Aside from some unexpected weakness in the GAAP earnings, there is nothing not to like. The company not only produced a robust 31.5% increase in the top-line revenue but it also beat the consensus by nearly 600 basis points. The revenue strength was driven by a 27.3% increase in comp-store sales that was bolstered by an increasing store count. The company opened 19 new Tractor Supply Company’s during the quarter and 3 new Petsense bringing the total count to +79 and +2 on a YOY basis.

The comp sales themselves are driven by a 14% increase in the number of transactions coupled with a 13% increase in transaction size. Every geographic region showed strong gains with the most robust performance of all in the digital channels. eCommerce sales grew triple digits for the 3rd consecutive quarter and are not expected to slow anytime soon.

Moving down the report, the company’s sales strength has resulted in leaner inventory and leverage to earnings. The gross margin increased 75 basis points over the last year and is attributable to fewer sales, less depth of sales, and an overall higher price-realization for the company’s merchandise. Sadly, costs related to the pandemic and the decision to refocus the Petsense expansion cut into the GAAP earnings but not enough to hurt the company. On a GAAP basis the $1.15 in reported earnings missed the consensus by $0.38 but the adjusted $1.64 beat by $0.13.

Tractor Supply Company Raises The Dividend 30%

We were expecting a sizeable dividend increase from Tractor Supply Company but not quite as big as what we got. The company’s board of directors saw fit to increase the distribution by 30% because of the revenue and earnings strength and there is still room for more. At this level, the payout ratio is still running in the low 30% range and there is ample free cash flow. The company’s balance sheet is showing some debt but not enough to worry about, coverage is running above 40X FCF, and leverage is below 1X. Based on the near-20% CAGR and the 11-year history of increases there should be an equally generous increase next year as well.

The Technical Outlook: Tractor Supply Company Is About To Change Trend

Shares of Tractor Supply Company have been in a trading range since the end of last summer but that may be about to change. The Q4 results and outlook for 2021 are robust and point to continued success for this company. Add to that a healthy dividend outlook and it’s a win-win scenario for dividend-growth investors.

Although the price action in TSCO was indifferent at best following the release the signal it’s giving is bullish. The market saw a little volatility that resulted in a moderately long-legged doji confirming support at a previously significant level. This level, near $149, is consistent with a previous signal that led to the current trading range. Assuming this level holds as support the next move should take TSCO back up to retest the recent highs, and probably set new highs as well.

2021 Is A New Era For Tractor Supply Company (NASDAQ:TSCO)

Featured Article: What is a Lock-Up Period?


7 Cryptocurrencies That Are Leading The Market Higher

An Influx Of Capital Is Driving Cryptocurrency Higher

There is an influx of money to the cryptocurrency market that is driving the entire complex higher. Not only is institutional interest peaking but recognition and use are on the rise as well. With Bitcoin setting new all-time highs 100% above the 2017 highs the number of new Bitcoin millionaires is on the rise too.

But Bitcoin is not the only cryptocurrency on the market today by far. The number of cryptocurrencies on the market has been growing steadily with more than 4,000 listed on Coinmarketcap alone. But that doesn’t mean they are all worth your time. Many if not most will not stand the test of time.

One way to judge the market’s interest in a cryptocurrency is its market performance gains. A cryptocurrency that is gaining in value is certainly one that you may want to own. The better method of judging the market’s interest in a cryptocurrency is the market cap. The cryptocurrency market is worth upwards of $1 trillion and growing, and most of that value is centered in the top seven. Together, the bottom 3,993 odd cryptocurrencies only account for 12% of the market and have yet to prove any lasting value.

View the "7 Cryptocurrencies That Are Leading The Market Higher".


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Tractor Supply (TSCO)2.4$184.19+2.4%1.13%25.51Hold$184.80
Compare These Stocks  Add These Stocks to My Watchlist 

MarketBeat - Stock Market News and Research Tools logo

MarketBeat empowers individual investors to make better trading decisions by providing real-time financial data and objective market analysis. Whether you’re looking for analyst ratings, corporate buybacks, dividends, earnings, economic reports, financials, insider trades, IPOs, SEC filings or stock splits, MarketBeat has the objective information you need to analyze any stock. Learn more about MarketBeat.

MarketBeat is accredited by the Better Business Bureau

© American Consumer News, LLC dba MarketBeat® 2010-2021. All rights reserved.
326 E 8th St #105, Sioux Falls, SD 57103 | U.S. Based Support Team at [email protected] | (844) 978-6257
MarketBeat does not provide personalized financial advice and does not issue recommendations or offers to buy stock or sell any security.

Our Accessibility Statement | Terms of Service | Do Not Sell My Information

© 2021 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided 'as-is' and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see disclaimer. Fundamental company data provided by Zacks Investment Research. As a bonus to opt-ing into our email newsletters, you will also get a free subscription to the Liberty Through Wealth e-newsletter. You can opt out at any time.