Tractor Supply Company
(
TSCO
) provided a sneak preview of its fourth -quarter results while
citing a robust sales performance during the quarter, which raised
its fiscal 2011 profit forecast. Tractor Supply raised its earnings
expectation for fiscal 2011 between $2.97 and $2.99 per share from
$2.85 to $2.89 per share.
The company anticipates a benefit of approximately 9 cents to be
included in its annual earnings guidance for an extra sales week
included in the fourth quarter. The current Zacks Consensus
Estimate stands at $2.91 per share which is below the company's
guidance range.
The farm equipment retailer provided a business update ahead of
its participation at ICR XChange Conference, Net sales, during the
fourth quarter, surged 20.1% to $1.24 billion from $1.03 billion in
the prior-year quarter. Further, Tractor Supply stated that an
extra sales week in the quarter contributed approximately 6.6% to
the sales growth. Net sales were ahead of the Zacks Consensus
Estimate of approximately $1.2 billion.
Robust performance in core consumable, usable and edible
products − for instance, pet food and animal feed − acted as a
catalyst for same-store sales, marking an increase of 7.6% during
the fourth quarter. Tractor Supply has been continuously witnessing
increasing trends in same-store sales. re
Fiscal 2011, so far
During the recession, Tractor Supply had suffered setbacks as
buyers avoided big-ticket purchases such as mowers, but recent
quarters have positively seen an uptick in results. The company's
impressive merchandising improvement strategy and solid same-store
sales trend resulted in double-digit top-line growth for the
company during the first three quarters of fiscal 2011.
Furthermore, improved inventory management and cost control
measures facilitated Tractor Supply to post robust growth in its
bottom line.
During first-quarter 2011, Tractor Supply registered a growth of
17.7% in its top line, resulting in an increase of 71% in its
bottom line. The company's second-quarter earnings per share rose
approximately 18% while its top line grew by 10.6%. During the
third quarter, Tractor Supply's earnings per share climbed 45%
primarily driven by an increase of 17.9% in net sales.
Our Take
We believe that the company's efficiency in managing inventory
level, strategic merchandise sourcing, private branding and cost
control measures will retain its momentum of increasing trends both
in its top and bottom line.
The company operates in a highly fragmented industry and faces
competition from larger retailers like
The Home Depot Inc.
(
HD
).
Tractor Supply's shares maintain a Zacks #2 Rank, which
translates into a short-term 'Buy' recommendation. Our long-term
recommendation on the stock remains 'Neutral'.
HOME DEPOT (
HD
): Free Stock Analysis Report
TRACTOR SUPPLY (
TSCO
): Free Stock Analysis Report
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