Tractor Supply Raises Dividend - Analyst Blog


In a bid to boost shareholders' return, Tractor Supply Company ( TSCO ) recently increased its quarterly dividend by 67%, or 8 cents, to 20 cents. The company used to pay dividend of 12 cents.

The increased dividend will be paid on June 5, 2012 to the shareholders of record as of May 21, 2012. The dividend yield based on the increased dividend and the current stock price is 0.8%.

The hike in the quarterly dividend was primarily aided by the company's strong balance sheet position and ability to generate excessive free cash flow. Moreover, the increase clearly signifies the company's potential to improve continuously in the long term. The company remains focused on maximizing its profits by continuously enhancing its merchandise assortments and improving customer offerings.

Going ahead in 2012, the company expects its profits to grow continually, given the right mix of products and marketing plans.

The company lately reported a very encouraging first quarter 2012, achieving $1 billion in total sales for the first time in the company's history. Tractor Supply's first-quarter results benefited mainly from the structural improvements made over the years. This enabled the company to adjust its offerings to suit customer demand and to promptly respond to events, such as the early onset of spring in March 2012.

Encouraged by strong first-quarter results, the company raised its fiscal 2012 earnings guidance range to $3.52 to $3.60 per share, compared with its earlier forecast of $3.38 to $3.46 per share. Moreover, net income for the year is estimated to be in the $260 - $265 million range, above the prior estimate of $246 - $253 million.

Net sales for fiscal 2012 has also been raised to $4.61 - $4.68 billion versus the previous guidance of $4.56 - $4.66 billion. In fiscal 2012, same-store sales are expected to register an increase of 4.0% to 5.5%, up from its prior forecast of 3% to 5%. Furthermore, the company has planned to open 90 to 95 new stores during fiscal 2012.

Tractor Supply is the largest operator of farm and ranch stores in the U.S., a unique market niche that serves the lifestyle needs of recreational farmers and ranchers. The company's stores are strategically located in small towns, close to its target customers, which provides a competitive edge over its rivals, such as The Home Depot Inc. ( HD ) and Lowe's Companies Inc. ( LOW ).

The company's shares maintain a Zacks #1 Rank, which translates into a short-term 'Strong Buy' rating. Our long-term recommendation on the stock remains 'Outperform'.

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TRACTOR SUPPLY (TSCO): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: HD , LOW , TSCO

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