Why Is Kinder Morgan (KMI) Down 4.3% Since Last Earnings Report?
Tractor Supply Company’s TSCO focus on store-growth endeavors, ONETractor initiative and investment in everyday businesses are its major strengths. Also, the company is gaining from its solid omni-channel efforts and the acquisition of Petsense LLC — a leading retailer of pet supplies and services.
These growth drivers have helped the stock to surge 48.8% in a year’s time, substantially outperforming the industry’s 1.4% rise. Also, this Zacks Rank #3 (Hold) stock has a long-term earnings growth rate of 13.2%, which looks appeasing.
Let’s delve deep.
Key Growth Catalysts
Tractor Supply remains committed to expansion of store base and incorporation of technological advancements to induce traffic and drive the top line. Moreover, the company leverages an extensive network of stores to penetrate into target markets, which enables it to generate healthy sales and gain market share. In 2018, it is likely to open 80 flagship stores and 20 Petsense stores. With this, Tractor Supply remains on track to achieve its long-term domestic store growth target of 2,500 stores.
Additionally, the company has been focused on efficiently managing its inventories to minimize the impact of weather on its business and capitalize on seasonal demand. Also, Tractor Supply is making efforts to enhance its IT systems and supply chain.
Currently, it is on track with the company’s constant investments in new systems, including demand planning, improved pricing and inventory allocation. It also remains focused on the execution of its digital priorities, which lends support needed to bolster growth at its merchandising, customer facing and logistics capabilities.
“ONETractor” Initiative to Boost Sales
Tractor Supply is integrating its physical and digital operations to offer consumers a seamless shopping experience. This is quite well evident from progress on its “ONETractor” initiative, which aims at connecting store and online shopping.
In the meantime, the company is reaping significant benefits from its Buy Online Pick Up in Store program and continues to expand its Neighbor’s Club customer rewards program. Also, results are expected to gain from its mobile POS and stockyard initiatives. These strategies are likely to drive the company’s top line and profitability.
Petsense Acquisition – Boon to Pet Business
Tractor Supply is progressing well with the integration of the Petsense LLC, which is likely to tap the roughly $60 billion pet market. Notably, this acquisition complements the company’s existing pets business operating under the HomeTown Pet Stores banner.
Furthermore, the company is expected to benefit from the impressive growth history and network of Petsense besides leveraging its own knowledge of the pet business. Also, it is on track to launch a premium dog and cat food brand, True Source, across its Petsense stores.
While the aforesaid factors speak well of Tractor Supply’s strengths, stiff industry competition and volatility in raw material prices remain concerns for the company. This might weigh on its margins, thus hurting profitability.
Nevertheless, we believe that the company is well poised for growth driven by its robust growth strategies and solid store-expansion initiatives.
You May Check These Top-Ranked Retail Stocks
Big 5 Sporting Goods Corp. BGFV has pulled off an average positive earnings surprise of 10.5% in the last four quarters. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores, Inc. BURL delivered an average positive earnings surprise of 17.8% in the trailing four quarters and carries a Zacks Rank #2 (Buy).
Five Below, Inc. FIVE, also a Zacks Rank #2 stock, has an impressive long-term earnings growth rate of 27.7%.
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