|
|
|
|
||
Tractor Supply Could Beat Earnings Estimates. And Its Growing Season Looks Long.Tractor Supply Could Beat Earnings Estimates. And Its Growing Season Looks Long.Rivas, Teresa.Barron's (Online); New York Tractor Supply Co. stock has been on a near triple-digit tear for the past year, but Guggenheim thinks the rally is far from over. Shares of Tractor Supply Co. (ticker: TSCO) were down 1.2% to $177.33 in midmorning trading Wednesday. The stock has gained 27.7% year to date and is up nearly 98% in the past 12 months. Analyst Steven Forbes reiterated a Buy rating and raised his price target to $200 from $180. The move comes ahead of the company's fiscal first-quarter results, due out April 22. Forbes is forecasting not only solid numbers but longer-term catalysts for the stock. As for the results, Forbes expects "relatively stable (if not stronger) seasonally adjusted productivity levels"—given consistent sales performance through much of 2020, along with the early arrival of spring. He raised his quarterly revenue estimate to $2.54 billion, about 5% ahead of consensus estimates. Tractor Supply's gross margins could be crimped by transportation costs, but Forbes thinks the company will more than offset that pressure by leveraging fixed costs. "In short, we expect Tractor Supply to deliver a top-and-bottom line beat later this month—a potential near-term catalyst." Forbes is also upbeat about the stock's performance over time. The company has upgraded its Neighbor's Club loyalty program to a tiered program based on spending, which he thinks will encourage more spending by its core customer base. In addition, customers with a Tractor Supply credit card are automatically in the top tier, a catalyst for more sign-ups for the club. Right now, current members account for 60% of sales, which shows the program is still in the early stage. And although Tractor Supply will face difficult same-store sales figures from 2020, Forbes argues that the company's "'core' growth profile appears to be strengthening ahead of cycling last year's difficult compares," which could set the stage for beat-and-raise quarters later in the year. Ultimately, Forbes believes that Tractor Supply should exit the pandemic "with a stronger secular growth profile" than it had before. |
return to message board, top of board |