Tractor Supply Company
) is set to report second-quarter 2013 results on Jul 24. Last
quarter, its earnings surged over 12% on a year-over-year basis
but was in line with the Zacks Consensus Estimate. Let us see how
things are shaping up for this announcement.
Growth Factors in the Past Quarter
The company's impressive merchandise improvement strategy
resulted in mid single-digit top-line growth in the last quarter.
Robust performances in core consumable, usable and edible
products − mainly for pet food and animal feed − acted as
catalysts for increase in the company's same-store sales.
Moreover, better cost containment measures related to store
personnel and lower incentive compensation expenses boosted its
operating margin. Further, as new construction activities are
showing signs of improvement, we believe that Tractor Supply is
well poised to capitalize on opportunities.
Furthermore, the company has been revamping itself by
concentrating on square footage growth and the maximization of
productivity from its existing store base. In addition, Tractor
Supply implemented significant changes in its store operations to
make them simpler and more customer-friendly. We expect such
initiatives to induce more traffic to its stores and boost the
Our proven model does not conclusively project Tractor Supply
to beat earnings this quarter. A stock needs to have both
positive Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) and a Zacks Rank #1, 2 or 3 to surpass earnings estimates.
However, this is not the case here due to the following
ESP for Tractor Supply is 0.00% since the Most Accurate Estimate
stands at $1.71, which is in line with the Zacks Consensus
Zacks #2 Rank (Hold):
Tractor Supply's Zacks Rank #2 increases the forecasting power of
ESP. However, we also need to have a positive ESP to be confident
of an earnings surprise call. We caution against stocks with
Zacks Rank #4 and 5 (Sell rated stocks) going into earnings
announcement, especially when the company is undergoing negative
Other Stocks to Consider
Tractor Supply is not the only firm we are looking up to this
earnings season. Our model shows that the following stocks have
the right combination of elements to post an earnings beat this
The Gap, Inc
) has an Earnings ESP of +1.70% and a Zacks Rank #2 (Buy).
Five Below, Inc
) has an Earnings ESP of +11.11% and a Zacks Rank #2 (Buy).
Deckers Outdoor Corp
) has an Earnings ESP of +6.60% and a Zacks Rank #3 (Hold).
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