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Tractor Supply (TSCO) Misses on Q1 Earnings, Keeps '18 View
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Tractor Supply Company (TSCO - Free Report) delivered lower-than-expected results in first-quarter 2018. However, both earnings and sales increased year over year. Also, management reiterated its guidance for 2018.
Following the soft quarterly results, shares of this leading rural lifestyle retail store chain were down 1.8% in pre-market trading. In the past three months, this Zacks Rank #3 (Hold) stock has lost 21.4% wider than the industry’s decline of 11%.
Q1 Highlights
Tractor Supply reported quarterly earnings of 57 cents per share, missing the Zacks Consensus Estimate by a penny. However, the bottom line increased 23.9% year over year backed by its growth initiatives.
Also, the company’s revenues increased 7.6% to $1,682.9 million but fell short of the Zacks Consensus Estimate of $1,690 million. This year-over-year growth can be attributed to rise in comparable-store sales (comps), which improved 3.7% against a decline of 2.2% in the year-ago period. While comparable store transaction count grew 3.2%, average ticket inched up 0.5%. Furthermore, traffic and sales growth were aided by the company’s ongoing efforts to build customer loyalty and enhance digital capabilities. Additionally, comps gained from improvement across all geographic regions as well as major product categories.
Tractor Supply also witnessed strength in everyday basic products across the consumable, usable and edible categories as well as winter seasonal products. Improvement in comps was somewhat compensated with soft sales across spring and summer seasonal products.
Tractor Supply Company Price, Consensus and EPS Surprise
Gross profit rose 8.8% year over year to $563.6 million in the quarter, with gross margin expanding 36 basis points (bps) to 33.5%. The upside was driven by robust sell-through of winter seasonal products, somewhat offset by higher transportation costs due to a rise in carrier rates and diesel fuel expenses.
Additionally, selling, general and administrative (SG&A) expenses, including depreciation and amortization, as a percentage of sales, grew 89 bps to 27.9%. This increase can be primarily attributed to investments in team member wages, increased store expenses and investments in infrastructure and technology to support the strategic long-term growth initiatives.
Financial Position
Tractor Supply ended first quarter with cash and cash equivalents of $132.4 million, long-term debt of $679.6 million and total stockholders’ equity of $1,313.2 million.
In the quarter under review, the company repurchased shares for $157.5 million. Additionally, it incurred capital expenditures of $45.1 million and generated cash flow from operating activities of about $21.9 million.
Store Update
In the first quarter, Tractor Supply opened 15 namesake stores and four Petsense stores.
As of Mar 31, 2018, the company operated 1,700 Tractor Supply stores in 49 states and 172 Petsense stores.
Guidance
Management remains impressed with its first-quarter results that witness margin expansions, comps growth and greater sales. Going ahead, it remains optimistic about the spring selling season. Further, Tractor Supply expects to balance investments between new store growth and ONETractor strategic initiative, alongside investing in everyday businesses to provide a seamless experience to its customers.
However, Tractor Supply reiterated its guidance for 2018. The company continues to project net sales in the band of $7.69-$7.77 billion reflecting 6-7% growth year over year. Comps growth is anticipated in the range of 2-3% for the year. Further, earnings per share are envisioned in the band of $3.95-$4.15. The Zacks Consensus Estimate for 2018 is pegged at $4.09.
Interested in Retail? Check These Three Trending Picks
KAR Auction Services, Inc. (KAR - Free Report) with a long-term earnings growth rate of 11% has delivered an average positive earnings surprise of 14.1% in the trailing four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Macy's, Inc. (M - Free Report) , also a Zacks Rank #1 stock, has a long-term earnings growth rate of 8.5%. Moreover, the company has pulled off a positive earnings surprise in each of the trailing three quarters.
Dollar General Corporation (DG - Free Report) has a long-term earnings growth rate of 14.6% and a Zacks Rank of 1.
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Tractor Supply (TSCO) Misses on Q1 Earnings, Keeps '18 View
Tractor Supply Company (TSCO - Free Report) delivered lower-than-expected results in first-quarter 2018. However, both earnings and sales increased year over year. Also, management reiterated its guidance for 2018.
Following the soft quarterly results, shares of this leading rural lifestyle retail store chain were down 1.8% in pre-market trading. In the past three months, this Zacks Rank #3 (Hold) stock has lost 21.4% wider than the industry’s decline of 11%.
Q1 Highlights
Tractor Supply reported quarterly earnings of 57 cents per share, missing the Zacks Consensus Estimate by a penny. However, the bottom line increased 23.9% year over year backed by its growth initiatives.
Also, the company’s revenues increased 7.6% to $1,682.9 million but fell short of the Zacks Consensus Estimate of $1,690 million. This year-over-year growth can be attributed to rise in comparable-store sales (comps), which improved 3.7% against a decline of 2.2% in the year-ago period. While comparable store transaction count grew 3.2%, average ticket inched up 0.5%. Furthermore, traffic and sales growth were aided by the company’s ongoing efforts to build customer loyalty and enhance digital capabilities. Additionally, comps gained from improvement across all geographic regions as well as major product categories.
Tractor Supply also witnessed strength in everyday basic products across the consumable, usable and edible categories as well as winter seasonal products. Improvement in comps was somewhat compensated with soft sales across spring and summer seasonal products.
Tractor Supply Company Price, Consensus and EPS Surprise
Tractor Supply Company Price, Consensus and EPS Surprise | Tractor Supply Company Quote
Margins & Costs
Gross profit rose 8.8% year over year to $563.6 million in the quarter, with gross margin expanding 36 basis points (bps) to 33.5%. The upside was driven by robust sell-through of winter seasonal products, somewhat offset by higher transportation costs due to a rise in carrier rates and diesel fuel expenses.
Additionally, selling, general and administrative (SG&A) expenses, including depreciation and amortization, as a percentage of sales, grew 89 bps to 27.9%. This increase can be primarily attributed to investments in team member wages, increased store expenses and investments in infrastructure and technology to support the strategic long-term growth initiatives.
Financial Position
Tractor Supply ended first quarter with cash and cash equivalents of $132.4 million, long-term debt of $679.6 million and total stockholders’ equity of $1,313.2 million.
In the quarter under review, the company repurchased shares for $157.5 million. Additionally, it incurred capital expenditures of $45.1 million and generated cash flow from operating activities of about $21.9 million.
Store Update
In the first quarter, Tractor Supply opened 15 namesake stores and four Petsense stores.
As of Mar 31, 2018, the company operated 1,700 Tractor Supply stores in 49 states and 172 Petsense stores.
Guidance
Management remains impressed with its first-quarter results that witness margin expansions, comps growth and greater sales. Going ahead, it remains optimistic about the spring selling season. Further, Tractor Supply expects to balance investments between new store growth and ONETractor strategic initiative, alongside investing in everyday businesses to provide a seamless experience to its customers.
However, Tractor Supply reiterated its guidance for 2018. The company continues to project net sales in the band of $7.69-$7.77 billion reflecting 6-7% growth year over year. Comps growth is anticipated in the range of 2-3% for the year. Further, earnings per share are envisioned in the band of $3.95-$4.15. The Zacks Consensus Estimate for 2018 is pegged at $4.09.
Interested in Retail? Check These Three Trending Picks
KAR Auction Services, Inc. (KAR - Free Report) with a long-term earnings growth rate of 11% has delivered an average positive earnings surprise of 14.1% in the trailing four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Macy's, Inc. (M - Free Report) , also a Zacks Rank #1 stock, has a long-term earnings growth rate of 8.5%. Moreover, the company has pulled off a positive earnings surprise in each of the trailing three quarters.
Dollar General Corporation (DG - Free Report) has a long-term earnings growth rate of 14.6% and a Zacks Rank of 1.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>