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Things to Note Ahead of Tractor Supply's (TSCO) Q4 Earnings

Zacks Equity Research

Tractor Supply Company TSCO is slated to report fourth-quarter 2019 results on Jan 30, before the opening bell. In the last reported quarter, the company’s earnings were in line with the Zacks Consensus Estimate. Further, its earnings outperformed the Zacks Consensus Estimate by 3.5%, on average, in the trailing four quarters.

The Zacks Consensus Estimate for fourth-quarter earnings has remained unchanged at $1.24 over the past 30 days. This suggests an increase of 11.7% from the year-ago period’s reported figure. Further, the consensus mark for revenues is pegged at $2,246 million, indicating a rise of 5.1% from the figure reported in the year-ago quarter.

The Zacks Consensus Estimate for 2019 earnings is pegged at $4.71, which indicates an improvement of 9.3% from the figure reported in 2018.

Key Factors to Note

Tractor Supply has been gaining from the ‘ONETractor’ strategy, which is aimed at connecting store and online shopping. Backed by the initiative, the company continues to drive growth, build customer-centric engagement, offer suitable products and services, and reinforce core infrastructure capabilities. Moreover, Tractor Supply has been benefiting from capabilities like Stockyard Kiosk and mobile point-of-sale, enhancement of the Tractor Supply credit card offering, and investments in its supply chain.

Tractor Supply Company Price, Consensus and EPS Surprise

 

Tractor Supply Company Price, Consensus and EPS Surprise

Tractor Supply Company price-consensus-eps-surprise-chart | Tractor Supply Company Quote

 

Also, the company’s omni-channel business has been gaining from the combination of its Buy Online Pick Up in Store ('BOPUS') and direct delivery to store facilities. It has been consistently expanding Neighbor’s Club loyalty program, which has resulted in membership growth, increased sales, greater frequency and higher average ticket sales. Additionally, the company’s focus on expanding store base and incorporating technological advancements to induce traffic and drive the top line might have paid off in the to-be-reported quarter. Moreover, efficient inventory management is expected to have positively impacted Tractor Supply’s fourth-quarter performance.

On the last earnings call, management guided earnings per share of $4.68-$4.72 for 2019 and sales of $8.40-$8.42 billion. Also, the company expects comps growth of 3.2-3.4% in 2019.

However, the company has been grappling with higher SG&A expenses due to increasing investments in infrastructure and technology. Any deleverage in SG&A expenses might have hurt margins.

What the Zacks Model Unveils

Our proven model doesn’t conclusively predict an earnings beat for Tractor Supply this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Tractor Supply carries a Zacks Rank #4 (Sell) and Earnings ESP of -2.26%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With Favorable Combinations

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:

Dillard's, Inc. DDS currently has an Earnings ESP of +14.67% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Walmart Inc. WMT currently has an Earnings ESP of +0.57% and a Zacks Rank #2.

Macy's, Inc. M presently has an Earnings ESP of +1.55% and a Zacks Rank #3.

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Walmart Inc. (WMT) : Free Stock Analysis Report
 
Tractor Supply Company (TSCO) : Free Stock Analysis Report
 
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Dillard's, Inc. (DDS) : Free Stock Analysis Report
 
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