Tractor Supply Up More Than 30% in 3 Months: Here's Why

Tractor Supply Company TSCO has gained from increased sales across product categories, channels and geographic regions, as consumers hoarded essentials amid the coronavirus outbreak. Notably, the company recruited more than 4,000 employees for team member positions to fulfill the growing demand. The company’s newly-launched contactless curbside delivery and buy online, pickup at store options are also aiding sales.

This has led shares of this Zacks Rank #2 (Buy) company to gain 31.2% in the past three months, outperforming the industry and the Retail-Wholesale sector’s growth of 7.3% and 12%, respectively. In fact, the stock has gained 29.7% since reporting robust first-quarter 2020 results on Apr 23. Although the company withdrew 2020 view on uncertain COVID-19 impacts, it noted that the second quarter has started on a solid note.

For second-quarter 2020, management projects net sales to increase 24-29% year over year. Comparable store sales (comps) are anticipated to increase 20-25%. Additionally, Tractor Supply expects to witness gross margin expansion in the second quarter. It also envisions earnings for the second quarter to be $2.45-$2.65 per share.

Let’s delve deeper

Factors Boosting the Stock

Tractor Supply witnessed sturdy sales in March when customers were increasingly hoarding core everyday items as well as usable and edible merchandise due to the coronavirus pandemic. Particularly in March, the company witnessed a comps increase of 12% on the back of robust growth in key consumable categories to the tune of more than 20%. Healthy demand in spring seasonal products also contributed to comps growth. Apart from these, the e-commerce business performed well in March.

Encouragingly, it plans to unveil a redesigned e-commerce website along with a new mobile application. The website is expected to be launched in the second quarter while the mobile app is expected to be available for download by the end of June. Moreover, it has expanded Buy Online Same Day/Next Day Delivery to all stores; implemented contactless curbside delivery for Buy Online, Pickup In Store; and accelerated the rollout of contactless payment options.

Further, the company remains focused on its store expansion plans and incorporation of technological advancements to induce traffic and drive the top line. Its sales and comps have been considerably gaining from the addition of new stores every quarter. Moreover, management expects to drive comps by improving marketing and merchandising initiatives as well as supply-chain efficiencies. The company is well positioned to expand its store base by increasing the number of domestic stores to 2,500 in the long term.

All said, we are optimistic that Tractor Supply’s well-chalked plans will help sustain the stock’s momentum on the bourses.

3 More Stocks to Consider

The Kroger Co. KR has an impressive long-term earnings growth rate of 4.9% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Office Depot ODP, also a Zacks Rank #2 stock, has an impressive long-term earnings growth rate of 6.8%.

Lowes Companies LOW, which presently carries a Zacks Rank #2, has an expected long-term earnings growth rate of 15.2%.

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