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Will Tractor Supply's (TSCO) Solid Strategies Aid Q2 Earnings?


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Tractor Supply Company TSCO is slated to report second-quarter 2018 results on Jul 26. The company has delivered an average positive earnings surprise of 1.8% in the trailing four quarters.

The Zacks Consensus Estimate for the second quarter is pegged at $1.60, reflecting about 28% growth year over year. Estimates have been stable in the past 30 days.

Tractor Supply Company Price, Consensus and EPS Surprise

Tractor Supply Company Price, Consensus and EPS Surprise | Tractor Supply Company Quote

Let's see how things are shaping up prior to this announcement.

Factors Likely to Impact 2Q18

Tractor Supply's focus on store-growth initiatives, ONETractor plan and investment in everyday businesses is commendable. The company remains on track to achieve its long-term domestic store growth target of 2,500 stores. It is also gaining from solid omni-channel efforts besides integrating its physical and digital operations to offer a seamless shopping experience.

In addition, the company's "ONETractor" initiative aimed at connecting store and online shopping is noteworthy. Currently, Tractor Supply is gaining from the Buy Online Pick Up in Store program and continuously enhancing its Neighbor's Club customer rewards program. Management expects results to benefit from its mobile POS and stockyard initiatives. Moreover, the company is witnessing solid comparable-store sales, courtesy of strength across all regions and major product categories.

We note that the company has been expanding its Petsense stores and intends to open nearly 20 stores this year. Tractor Supply is expected to benefit from the impressive growth history and network of Petsense alongside leveraging its own knowledge of the pets business. Meanwhile, it is progressing well with the integration of Petsense stores. Also, the company is on track to launch a premium dog and cat food brand, True Source, across these stores.

These strategies are likely to drive the company's top line in the upcoming quarter. Analysts polled by Zacks expect revenues of $2,173 million, up 7.7% from the year-ago quarter. Notably, the company has been witnessing sales and earnings growth for more than two years now.

However, higher selling, general and administrative expenses due to investments in team member wages, increased store expenses, and investments in infrastructure and technology remain a concern for the company. This might dent Tractor Supply's margins in the near term. Also, stiff industry competition and volatility in raw material prices are worrisome. Yet, the company remains optimistic about the spring selling season, which is likely to drive quarterly results.

Zacks Model

Our proven model conclusively shows that Tractor Supply is likely to beat estimates in the second quarter. This is because a stock needs to have both - a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) - for this to happen. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

Tractor Supply has an Earnings ESP of +0.09% and a Zacks Rank #2, making us confident about an earnings beat.

Other Stocks With Favorable Combination

Here are some companies you may want to consider as our model shows that these too have the right combination of elements to beat estimates:

Urban Outfitters, Inc. URBN has an Earnings ESP of +1.46% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

The Home Depot, Inc. HD has an Earnings ESP of +2.22% and a Zacks Rank of 3.

GameStop Corp. GME has an Earnings ESP of +2.13% and a Zacks Rank #3.

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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 Nasdaq, Inc.



This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: HD , URBN , GME , TSCO



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