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Can Tractor Supply (TSCO) Surprise This Earnings Season? - Analyst Blog

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Tractor Supply Company ( TSCO ) is set to report its fourth quarter and fiscal 2013 results after the market closes on Jan 29. Last quarter, this farm and ranch store chain retailer posted a positive earnings surprise of approximately 12.20%. Let's see how things are shaping up for this announcement.

Growth Factors in the Past Quarter

In the third quarter Tractor Supply mainly gained from an improvement in both the top line and margins. Top line gains resulted from strong comparable-store sales performance and favorable weather conditions. Robust performance in core consumable, usable and edible products acted as a catalyst for increase in the company's same-store sales. This along with better cost containment boosted its operating margin. We commend Tractor Supply's consistent endeavors to remain focused on growth, which produced desirable results amid a soft economic environment.

We believe that the company's sustained focus on revamping itself by concentrating on square footage growth and maximizing store productivity bode well for its future.

Earnings Whispers?

Our proven model does not conclusively project Tractor Supply as likely to beat earnings this quarter. A stock needs to have both positive Earnings ESP and a Zacks Rank #1, 2 or 3 to surpass earnings estimates. However, this is not the case here due to the following factors:

Zacks ESP: ESP for Tractor Supply is 0.00% since the Most Accurate estimate stands at 65 cents per share, which is in line with the Zacks Consensus Estimate.

Zacks #2 Rank (Buy): Tractor Supply's Zacks Rank #2 increases the predictive 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 estimate revisions.

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 to post an earnings beat:

Michael Kors Holdings Limited 's ( KORS ) Earnings ESP stands at 1.15% and it carries a Zacks Rank #2 (Buy).

Under Armour Inc. ( UA ) has an Earnings ESP of 3.77% and a Zacks Rank #3 (Hold).

Newell Rubbermaid Inc. ( NWL ) with an Earnings ESP of 2.17% holds a Zacks Rank #3 (Hold).

MICHAEL KORS (KORS): Free Stock Analysis Report

NEWELL RUBBERMD (NWL): Free Stock Analysis Report

TRACTOR SUPPLY (TSCO): Free Stock Analysis Report

UNDER ARMOUR-A (UA): 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 Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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