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Tractor Supply (TSCO) Q2 Comps Low: Will It Hurt Earnings?

Tractor Supply CompanyTSCO is slated to report second-quarter 2016 results after the market closes on Jul 20, 2016. In the previous quarter, this leading rural lifestyle retail store chain delivered a positive earnings surprise of 8.7%.

In fact, Tractor Supply has delivered an average positive earnings surprise of 2.98% in the trailing four quarters, with better-than-expected results in two of these and in line earnings in the remaining two. Let's see how things are shaping up for this announcement.

TRACTOR SUPPLY Price and EPS Surprise

TRACTOR SUPPLY Price and EPS Surprise | TRACTOR SUPPLY Quote

Factors Influencing This Quarter

The June quarter earnings picture for Tractor Supply looks gloomy as the company recently reported second-quarter 2016 comparable store sales (comps) and provided a soft outlook. Dismal second-quarter comps performance was hit by the seasonal nature of its business, as the company witnessed weaker-than-anticipated sales of spring season categories due to unseasonably cold weather in many parts of the country.

The company generally reports higher sales and profits in the spring and winter selling seasons on the back of demand for its merchandise offering. However, the second quarter, this year, was marked by an unexpected cool winter weather, which had a material impact on the company's sales.

Though weather conditions started to normalize in June and the month witnessed sturdy sales performance, driven by the Memorial Day weekend and reversal of warm weather, Tractor Supply is not very optimistic about the sales shift to the third quarter. Considering this uncertainty and a disappointing second quarter, management lowered its sales and earnings outlook for 2016.

All these factors indicate that Tractor Supply is not in for a very good second quarter this year. So let's wait and see what is in store for the company in the upcoming earnings release.

Earnings Whispers

Our proven model does not conclusively show that Tractor Supply is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank of #1, 2 or 3 for this to happen. This is not the case here as you will see below.

Zacks ESP: Tractor Supply currently has an Earnings ESP of 0.00%. This is because both the Most Accurate estimate and the Zacks Consensus Estimate stand at $1.16.

Zacks Rank: Tractor Supply carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

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

Caterpillar Inc. CAT , slated to report earnings on Jul 26, has an Earnings ESP of +2.08% and a Zacks Rank #3 (Hold).

Amazon.com Inc. AMZN , slated to report earnings on Jul 28, has an Earnings ESP of +37.72% and holds a Zacks Rank #3.

AutoNation Inc. AN , scheduled to report earnings on Jul 29, has an Earnings ESP is at +4.76% and carries a Zacks Rank #3.

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AUTONATION INC (AN): Free Stock Analysis Report

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CATERPILLAR INC (CAT): Free Stock Analysis Report

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 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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