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Earnings Scorecard: Tractor Supply Co.

Zacks Equity Research

Leading retail firm and ranch store brand, Tractor Supply Co. (NasdaqGS:TSCO - News) ended fiscal 2011 keeping pace with its trend of consistently outperforming the Zacks Consensus Estimate. For the straight four quarters of 2011, including the recently reported fourth quarter, the company on an ongoing basis posted earnings surprises, resulting in an average surprise of 17.10%. Earnings surprise for the most recent quarter was 4.35%, beating the Zacks Consensus Estimate by 4 cents per share.

Last Quarter Synopsis

Earnings per share in the fourth quarter of fiscal 2011 came in at 96 cents, surpassing the Zacks Consensus Estimate of 92 cents as well as prior-year earnings of 67 cents per share. Tractor Supply earned $70.5 million in the quarter, exceeding the prior-year quarter’s net income of $50.2 million.

Tractor Supply has been witnessing increasing trends in same-store sales. The reported quarter was no exception as robust performance in core consumable, usable and edible products − for instance, pet food and animal feed − acted as a catalyst for an increase of 7.6% in same-store sales.

During the recession, Tractor Supply had suffered setbacks as buyers avoided big-ticket purchases, such as mowers, but recent quarters have seen an uptick in results. The company’s impressive merchandising improvement strategy along with solid same-store sales trend resulted in double-digit top-line growth in revenues.

Net sales in the quarter surged 20.1% to $1,240.0 million from $1,032.6 million in the prior-year quarter. The percentage growth includes a 6.6% benefit from an extra week during the quarter. Moreover, total revenue surpassed the Zacks Consensus Estimate of $1,220.0 million.

We have discussed the quarterly results at length here: Tractor Supply Beats Again

Agreement – Estimate Revisions

The agreement of estimate revisions, following the close of fiscal 2011, displayed mixed sentiments among the analysts. However, overall, the revisions indicated increasing sentiments for all mentioned periods expect the second quarter of 2012. For the upcoming quarter, 4 out of 18 analysts, made upward estimate revisions while 2 analysts pulled down estimates in the last 7 days. Over the past month, 6 analysts moved up their estimates for the first quarter of 2012 while 2 analysts moved down the same.

Estimates for the second quarter of 2012, in the last 7 days, witnessed only downward movements with 10 out of 17 analysts lowering estimates while none raised the same. In the 30-day period, 1 analyst raised estimates for the second quarter while 9 analysts lowered estimates.

For full-year 2012, estimate revisions in the last 7 days were positive with 3 out of 18 analysts raising estimates and none of them lowering estimates. The last 30 days saw 17 analysts increasing estimates for 2011 and 1 analyst decreasing estimates. For 2013, 2 out of 18 analysts upped their estimates with only 1 analyst slashing them in the last 7 days. In the last 30 days, estimates for 2013 moved in a single direction with 5 analysts raising estimates.

Magnitude – Consensus Estimate Trend

The estimate revisions in the last 7 and 30 days clearly reflect an upward trend in the Zacks Consensus Estimate for the upcoming quarter and fiscal years 2012 and 2013. However, the revisions point to a downside in the Zacks numbers for the second quarter of 2012.

Following the estimate changes, the Zacks Consensus Estimate for the first quarter of 2012 moved up by a penny to 31 cents per share in the last 30 days, while it remained stable over the last 7 days. Reflecting negative revisions, the Zacks Consensus Estimate for second-quarter 2012 moved down 4 cents to $1.43 per share over the past month, while the downside was 5 cents in the last 7 days.

Positivity also surrounded the fiscal year estimates with the Zacks Consensus Estimate for fiscal 2011 moving up 10 cents to $3.48 per share in the 30-day period and up 3 cents in the last 7 days. For fiscal 2012, the Zacks Consensus Estimate increased 17 cents to $4.09 per share in the past month and was down 2 cents in the 7-day period.


On the back of perked-up results and brighter sales trends witnessed in 2011, the Tennessee-based retail farm and ranch store chain is expecting earnings of $3.38 to $3.46 per share for fiscal 2012, a growth of 12% - 15% from fiscal 2011 earnings of $3.01. Moreover, the company has set a long-term target of generating 25% of sales from private label brands and 13% from strategic direct sourcing. 

Further, in an effort to boost margins, Tractor Supply is expanding its portfolio of private label brands and is also focusing on direct sourcing.

Besides, the economy is showing signs of stability in the housing market as consumer spending on small projects are witnessing considerable growth.

Tractor Supply is the largest operator of farm and ranch stores in the U.S., a unique market niche that serves the lifestyle needs of recreational farmers and ranchers. The company’s stores are strategically located in small towns, close to its target customers, which provide a competitive edge over its rivals, such as The Home Depot Inc. (NYSE:HD - News) and Lowe’s Companies Inc. (NYSE:LOW - News).

Tractor Supply’s shares have a Zacks #2 Rank, which translates into a short-term ‘Buy’ rating. Our long-term recommendation on the stock remains ‘Outperform’.

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