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Have you been paying attention to shares of Tractor Supply (TSCO)? Shares have been on the move with the stock up 7% over the past month. The stock hit a new 52-week high of $182.8 in the previous session. Tractor Supply has gained 28.8% since the start of the year compared to the 2.2% move for the Zacks Retail-Wholesale sector and the 16.9% return for the Zacks Retail - Miscellaneous industry.
What's Driving the Outperformance?
The stock has an impressive record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on January 28, 2021, Tractor Supply reported EPS of $1.64 versus consensus estimate of $1.52.
For the current fiscal year, Tractor Supply is expected to post earnings of $6.68 per share on $10.86 billion in revenues. This represents a -2.77% change in EPS on a 2.27% change in revenues. For the next fiscal year, the company is expected to earn $7.21 per share on $11.44 billion in revenues. This represents a year-over-year change of 7.93% and 5.3%, respectively.
Tractor Supply may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as these give investors a variety of ways to comb through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. The idea behind the style scores is to help investors pick the most appropriate Zacks Rank stocks based on their individual investment style.
Tractor Supply has a Value Score of C. The stock's Growth and Momentum Scores are A and C, respectively, giving the company a VGM Score of A.
In terms of its value breakdown, the stock currently trades at 27.1X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 20.6X versus its peer group's average of 8.9X. Additionally, the stock has a PEG ratio of 3.01. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, Tractor Supply currently has a Zacks Rank of #2 (Buy) thanks to rising earnings estimates.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if Tractor Supply fits the bill. Thus, it seems as though Tractor Supply shares could have a bit more room to run in the near term.
How Does Tractor Supply Stack Up to the Competition?
Shares of Tractor Supply have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also solid potential picks, including BuildABear Workshop (BBW), MarineMax (HZO), and Tractor Supply (TSCO), all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
However, it is worth noting that the Zacks Industry Rank for this group is in the bottom half of the ranking, so it isn't all good news for Tractor Supply. Still, the fundamentals for Tractor Supply are promising, and it still has potential despite being at a 52-week high.
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Tractor Supply Company (TSCO) : Free Stock Analysis Report
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