Tractor Supply Company Delivers A Bumper Crop Of Growth

Monday, July 19, 2021 | Thomas Hughes
Tractor Supply Company Delivers A Bumper Crop Of Growth

Tractor Supply Company Deserves Respect

Tractor Supply Company (NASDAQ: TSCO) has been one of our favorite Underdog growth stories for the last 18 months or so. The company’s new CEO embarked on a revitalization strategy that refocused on the consumers and e-commerce, and the pandemic sparked trends that are proving to be sustainable and stronger-than-expected. Those two factors meshed like precision machinery and resulted in a sustained high level of growth.  More importantly,  the company appears to be navigating the inflationary environment and is delivering real value to shareholders.

“As the country reopens, the Out Here lifestyle remains incredibly relevant as we continue to grow our active customer count and retain last year’s new and reengaged customers. We are increasing our earnings guidance given our strong results and the outlook for our customer trends and ongoing market share gains. The team is executing at a high level and advancing our Life Out Here Strategy while navigating the cost pressures we are experiencing. With a resilient business model, ongoing market share growth and strategic investments to transform the Company, we are excited about the significant opportunities ahead of us and remain committed to disciplined financial returns and sustained profitable growth.”

Tractor Supply Company Plows Through The Consensus

Tractor Supply Company had in one fantastic second quarter. The company reported $3.60 billion in net consolidated revenue to set a company record. The revenue is up 13.2% from last year, beat the consensus by 350 basis points, and it is on top of a very difficult + 35% comp in last year's second quarter. Over the last two years, sales are up 41%, and the internal data is good as well. 

Quarterly comps are up 10.5% on a 4.5% increase in tickets and a 6.5% increase in ticket average. The company reports strength in all categories pointing out every-day and seasonal items in the report. Notably, e-commerce sales experienced the fourth consecutive quarter of triple-digit gains. This is very significant as e-commerce Including same-day pick-up and delivery has become a large portion of the company's net revenue and we view these gains as very sticky.

Moving down the report, the company experienced a slight contraction in gross margins, less than 70 basis points, due to freight, the recently-launched Loyalty Club, And product mix shifts. Looking forward, the Loyalty Club expenses will dissipate soon and will ultimately drive higher sales over the long term so aren't a problem for us. The other two issues are noteworthy but do not yet present a concern. On the bottom line, the company's GAAP EPS of $3.19 beat the consensus by $0.24 is up about 1000 basis points from last year.

Tractor Supply Is Growing Growing Growing

Tractor Supply Company's revenue strength is due in part to the company's growth strategy. Tractor Supply opened a net of 25 new stores including 32 tractor supply companies and 3 new Petsense and there are still plans to open more stores this year. This helped lead management to raise guidance for revenue to a range of $12.10 billion to $12.30 billion versus the consensus of $11.64 billion, guidance that we see driving the stock higher over the next 6 to 12 months.

Price action is coming under a little bit of pressure and the early premarket action but this is due more to the general market conditions than to Tractor Supply Company's result or outlook. In our view, the post-earnings weakness is a buying opportunity for investors interested in a high-quality growth stock that pays A very safe and growing 1% dividend. Longer-term, we expect to see this stock retesting the recent highs near $200 fairly soon, and then breaking out to set new highs before the end of the year. 

Tractor Supply Company Delivers A Bumper Crop Of Growth

Featured Article: Stocks at 52 Week High


7 Great Dividend Stocks to Buy For a Comfortable Retirement

There are people who will say the day of set it and forget it retirement accounts are over. But it’s a narrative we’ve heard before. The truth is the formula for saving for and enjoying a comfortable retirement, like the formula for weight loss, hasn’t really changed. A lot depends on whether an individual has the discipline to see it through.

Dividend stocks remain one of the core elements of a retirement portfolio. As individuals near retirement the ability to reinvest dividends allows for a greater total return. And once individuals need to live off their portfolio, the dividends provide a source of income without having to tap their principal.

However, not all dividend stocks are the same and many investors get sucked in by the allure of a high-yield dividend stock. But what you’re really looking for are companies with a history of increasing its dividend. The ability to increase a dividend over time illustrates that the company has a business model that can hold up regardless of how the broader economy is performing.

In this special presentation, we’ll highlight seven stocks that individuals can buy today to capture a stable, recurring dividend.

View the "7 Great Dividend Stocks to Buy For a Comfortable Retirement".


Companies Mentioned in This Article

CompanyMarketRank™Current PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Tractor Supply (TSCO)2.3$188.07+0.2%1.11%25.04Buy$191.32
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.