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Valued at a market cap of $30.5 billion, Tractor Supply Company (TSCO) is a rural lifestyle retailer that is focused on supplying the lifestyle needs of recreational farmers and ranchers and others who enjoy the rural lifestyle, as well as tradesmen and small businesses. The Brentwood, Tennessee-based company provides its products under various brands, including 4health, Paws & Claws, American Farmworks, and Producer's Pride, to name a few.
Shares of this farm supplies company have slightly underperformed the broader market over the past 52 weeks. TSCO has gained 22% over this time frame, while the broader S&P 500 Index ($SPX) has soared 22.5%. However, on a YTD basis, the stock is up 8.8%, outpacing SPX’s 4.2% rise.
Narrowing the focus, Tractor Supply has lagged behind the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 26.5% return over the past 52 weeks but has outperformed XLY's marginal gain on a YTD basis.
On Jan. 30, shares of Tractor Supply plunged 5% after its Q4 earnings release as the company delivered a weaker-than-expected Q4 profit of $0.44 per share, which declined 4.3% from the year-ago and revenues of $3.8 billion. However, despite the slight revenue miss, the top line figure climbed 3.1% year-over-year. New store openings and growth in comparable store sales primarily resulted in revenue growth.
However, higher operating expenses fueled by a rise in selling, general, and administrative (SG&A) expenses, including depreciation and amortization, contributed to its bottom-line miss.
For the current fiscal year, ending in December, analysts expect TSCO’s EPS to grow 6.4% year over year to $2.17. The company’s earnings surprise history is mixed. It topped or met the Wall Street estimates in three of the last four quarters while missing on another occasion.
Among the 31 analysts covering the stock, the consensus rating is a “Moderate Buy,” which is based on 15 “Strong Buy,” one “Moderate Buy,” 13 “Hold,” one “Moderate Sell,” and one “Strong Sell” rating.
This configuration is slightly more bullish than three months ago, with 14 analysts suggesting a “Strong Buy” rating.
On Jan. 21, Guggenheim maintained a “Buy” rating on TSCO and raised its price target to $60, which indicates a nearly 4% potential upside from the current levels.
The mean price target of $59.16 represents a slight 2.5% upside from Tractor Supply’s current price levels, while the Street-high price target of $67 suggests an upside potential of 16.1%.
