Tractor Supply Takes Lead: Stays Ahead of Industry in a Year
Shares of Tractor Supply Company TSCO have displayed unprecedented growth in the past year and emerged as an attractive investment option. Notably, the stock surged 44.3% in a year, marking an outperformance compared with the industry’s growth of 18.4%.
We believe that the stock of this Brentwood, TN-based farm and ranch store retailer is poised to witness further momentum, based on its store growth initiatives, ONETractor plan and investment in everyday businesses. Further, the company’s omni-channel efforts and rewards program are providing support. Additionally, this Zacks Rank #2 (Buy) company’s impressive long-term earnings growth rate of 12.8% and a VGM Score of A fortify our positive view on the stock.
Let’s delve deeper and find out reasons that are aiding Tractor Supply.
Tractor supply created a niche in the market, driven by its broad assortment of products that are tailored to meet regional and geographic needs. It offers a wide array of merchandises such as livestock, pet and animal products; maintenance products for agricultural and rural use; hardware and tools; lawn and garden power equipment; truck and towing products; and work apparel.
Tractor Supply’s initiatives — including expansion of store base and incorporation of technological advancements to induce traffic — are the key revenue drivers. The company remains on track to attain long-term domestic store growth target of 2,500. In second-quarter 2018, Tractor Supply opened 25 namesake stores and three Petsense stores. Year to date, it has launched 40 namesake and seven Petsense stores, thus, remaining on track to reach the target of opening 80 flagship stores and 20 Petsense stores in 2018.
Over the years, the company gained from its focus on efficiently managing inventories to minimize the impact of weather on its business and capitalize on seasonal demand. With regard to this, it is focusing on enhancement of IT systems and supply chain. It is also working to strike a balance between initiatives and investments in the company’s stores and distribution centers, with strict cost disciplines and operational efficiencies.
Tractor Supply’s “ONETractor” initiative, aimed at connecting store and online shopping, is a key step in integrating its physical and digital operations. Consequently, the company is reaping benefits from its ‘Buy Online Pick Up in Store’ program while it continues to expand its Neighbor’s Club customer rewards program. Management expects both of these strategies to play a major role in boosting the top line. It also expects long-term results to benefit from the company’s mobile POS and stockyard initiatives.
Moreover, after a solid second-quarter 2018, Tractor Supply’s upbeat outlook for 2018 drives optimism. Notably, the company has delivered earnings and sales beat in three out of the trailing four quarters. For 2018, it anticipates net sales of $7.77-$7.80 billion, with comps growth of 3-3.5%. Further, it envisions earnings per share of $4.10-$4.20, up from $3.33 in 2017.
Certainly, Tractor Supply looks strong amid changing retail landscape. The company’s initiatives offer significant growth potential in the days ahead.
Looking for More Trending Picks? Look at These
Some other top-ranked stocks in the same industry are Office Depot, Inc. ODP, Five Below Inc. FIVE and Regis Corporation RGS, each sporting a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Office Depot gained 25.4% in the last three months. The company has long-term earnings growth rate of 17.3%.
Five Below has long-term EPS growth rate of 30%. Further, the stock has gained a whopping 136.7% in the past year.
Regis grew nearly 21.5% in the last three months. Moreover, the company has long-term EPS growth rate of 9%.
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