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Tractor Supply (TSCO) to Expand in Midwest With Orscheln Buyout
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Tractor Supply Company (TSCO - Free Report) has agreed to acquire Orscheln Farm and Home in a deal worth $297 million. Orscheln Farm and Home comprises 167 stores across 11 states, including Missouri, Kansas, Nebraska, Iowa, Indiana, Oklahoma, Arkansas, Texas, Kentucky, Illinois and Ohio. With this acquisition, Tractor Supply will be able to expand its base in the Midwest and better serve the rural communities there.
Further, the deal is subjected to customary closing conditions. Management noted that this transaction will be funded by cash on hand. Post the completion of the deal, it is likely to be immediately accretive to earnings per share.
We believe the acquisition is in sync with Tractor Supply’s growth initiatives, which include expansion of store base and incorporation of technological advancements to induce traffic and drive the top line. The company’s sales and comps have been considerably gaining from the addition of new stores every quarter. For 2021, it expects to open 80 Tractor Supply stores and 10 Petsense stores.
What Else Should You Know?
Tractor Supply is focused on integrating its physical and digital operations to offer consumers a seamless shopping experience. The company remains on track with the ‘ONETractor’ strategy that is aimed at connecting store and online shopping. Backed by this initiative, the company continues to drive growth, build customer-centric engagement, offer suitable products and services, and reinforce core infrastructure capabilities. Also, the company is benefiting from the rollout of capabilities like stockyard in-store kiosk and mobile point-of-sale (PoS) in all its stores, enhancement of the Tractor Supply credit card offering and investments in the supply chain.
Other notable omnichannel investments, including curbside pickup, same-day and next-day delivery, a re-launched website, and the new mobile app contributed to triple-digit digital sales growth in the fourth quarter of 2020. Also, higher conversions aided digital sales to a large extent. In 2020, about 75% of its omnichannel sales were picked up at a Tractor Supply store, reinforcing the importance of its stores to customers. Apart from these, its newly launched mobile app and the Neighbor's Club loyalty program bode well.
Driven by such upsides, the company has provided guidance for 2021. It expects net sales of $10.7-$11 billion for 2021, with comps movement between a decline of 2% and growth of 1%. Operating margin is anticipated to be 9.3-9.6%, marking a significant increase when compared to the baseline 2019 performance. Moreover, net income is likely to be $750-$800 million, while earnings per share are expected to be $6.50-$6.90.
Apart from these, it is on track to build up on Tractor Supply’s Out Here lifestyle assortment and convenient shopping format to gain new customers and market share. As part of the Life Out Here Strategy, the company also provided long-term financial growth targets for three to five years. Management envisions achieving net sales growth of 6-7%, while comps are expected to grow 4-5%. Further, operating margin is expected in the range of 9-9.5% and earnings per share are expected to grow 8-10%.
Encouragingly, this Zacks Rank #3 (Hold) stock has gained 32.6% in the past three months, outperforming the industry’s growth of 15.2%.
Tapestry (TPR - Free Report) , with a Zacks Rank #2 (Buy), has an expected long-term earnings growth rate of 10%.
DICK’S Sporting Goods, Inc. (DKS - Free Report) has a long-term earnings growth rate of 5.6% and presently, a Zacks Rank #2.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
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Tractor Supply (TSCO) to Expand in Midwest With Orscheln Buyout
Tractor Supply Company (TSCO - Free Report) has agreed to acquire Orscheln Farm and Home in a deal worth $297 million. Orscheln Farm and Home comprises 167 stores across 11 states, including Missouri, Kansas, Nebraska, Iowa, Indiana, Oklahoma, Arkansas, Texas, Kentucky, Illinois and Ohio. With this acquisition, Tractor Supply will be able to expand its base in the Midwest and better serve the rural communities there.
Further, the deal is subjected to customary closing conditions. Management noted that this transaction will be funded by cash on hand. Post the completion of the deal, it is likely to be immediately accretive to earnings per share.
We believe the acquisition is in sync with Tractor Supply’s growth initiatives, which include expansion of store base and incorporation of technological advancements to induce traffic and drive the top line. The company’s sales and comps have been considerably gaining from the addition of new stores every quarter. For 2021, it expects to open 80 Tractor Supply stores and 10 Petsense stores.
What Else Should You Know?
Tractor Supply is focused on integrating its physical and digital operations to offer consumers a seamless shopping experience. The company remains on track with the ‘ONETractor’ strategy that is aimed at connecting store and online shopping. Backed by this initiative, the company continues to drive growth, build customer-centric engagement, offer suitable products and services, and reinforce core infrastructure capabilities. Also, the company is benefiting from the rollout of capabilities like stockyard in-store kiosk and mobile point-of-sale (PoS) in all its stores, enhancement of the Tractor Supply credit card offering and investments in the supply chain.
Other notable omnichannel investments, including curbside pickup, same-day and next-day delivery, a re-launched website, and the new mobile app contributed to triple-digit digital sales growth in the fourth quarter of 2020. Also, higher conversions aided digital sales to a large extent. In 2020, about 75% of its omnichannel sales were picked up at a Tractor Supply store, reinforcing the importance of its stores to customers. Apart from these, its newly launched mobile app and the Neighbor's Club loyalty program bode well.
Driven by such upsides, the company has provided guidance for 2021. It expects net sales of $10.7-$11 billion for 2021, with comps movement between a decline of 2% and growth of 1%. Operating margin is anticipated to be 9.3-9.6%, marking a significant increase when compared to the baseline 2019 performance. Moreover, net income is likely to be $750-$800 million, while earnings per share are expected to be $6.50-$6.90.
Apart from these, it is on track to build up on Tractor Supply’s Out Here lifestyle assortment and convenient shopping format to gain new customers and market share. As part of the Life Out Here Strategy, the company also provided long-term financial growth targets for three to five years. Management envisions achieving net sales growth of 6-7%, while comps are expected to grow 4-5%. Further, operating margin is expected in the range of 9-9.5% and earnings per share are expected to grow 8-10%.
Encouragingly, this Zacks Rank #3 (Hold) stock has gained 32.6% in the past three months, outperforming the industry’s growth of 15.2%.
3 Retail Stocks to Watch
Hibbett Sports, Inc. (HIBB - Free Report) has a long-term earnings growth rate of 17% and currently, a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Tapestry (TPR - Free Report) , with a Zacks Rank #2 (Buy), has an expected long-term earnings growth rate of 10%.
DICK’S Sporting Goods, Inc. (DKS - Free Report) has a long-term earnings growth rate of 5.6% and presently, a Zacks Rank #2.
Zacks Names “Single Best Pick to Double”
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>