Has Tractor Supply Company (NASDAQ:TSCO) Improved Earnings Growth In Recent Times?
After reading Tractor Supply Company's (NASDAQ:TSCO) latest earnings update (29 December 2018), I found it beneficial to look back at how the company has performed in the past and compare this against the most recent numbers. As a long-term investor I tend to pay attention to earnings trend, rather than a single number at one point in time. I also like to compare against an industry benchmark to understand whether TSCO has outperformed, or whether it is simply riding an industry wave. Below is a brief commentary on my key takeaways.
View our latest analysis for Tractor Supply
How Well Did TSCO Perform?
TSCO's trailing twelve-month earnings (from 29 December 2018) of US$532m has jumped 26% compared to the previous year.
Furthermore, this one-year growth rate has exceeded its 5-year annual growth average of 7.6%, indicating the rate at which TSCO is growing has accelerated. What's enabled this growth? Let's see if it is only due to industry tailwinds, or if Tractor Supply has seen some company-specific growth.
In terms of returns from investment, Tractor Supply has invested its equity funds well leading to a 34% return on equity (ROE), above the sensible minimum of 20%. Furthermore, its return on assets (ROA) of 18% exceeds the US Specialty Retail industry of 7.0%, indicating Tractor Supply has used its assets more efficiently. However, its return on capital (ROC), which also accounts for Tractor Supply’s debt level, has declined over the past 3 years from 38% to 33%. This correlates with an increase in debt holding, with debt-to-equity ratio rising from 0.2% to 28% over the past 5 years.
What does this mean?
Though Tractor Supply's past data is helpful, it is only one aspect of my investment thesis. While Tractor Supply has a good historical track record with positive growth and profitability, there's no certainty that this will extrapolate into the future. I recommend you continue to research Tractor Supply to get a more holistic view of the stock by looking at:
Future Outlook: What are well-informed industry analysts predicting for TSCO’s future growth? Take a look at our free research report of analyst consensus for TSCO’s outlook.
Financial Health: Are TSCO’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 29 December 2018. This may not be consistent with full year annual report figures.
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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
