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Here's Why Tractor Supply (TSCO) Seems a Lucrative Bet Now

Tractor Supply Company TSCO appears a solid investment option, thanks to its sturdy business strategies. The company is benefiting from its Life Out Here Strategy and the Neighbor’s Club membership program. The ‘ONETractor’ strategy, which is aimed at connecting store and online shopping, appears encouraging too. Buoyed by such endeavors, shares of this Zacks Rank #2 (Buy) company have gained 28.1% in the past six months and outperformed the industry’s 6.6% growth.

Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for 2024 sales and earnings per share (EPS) is currently pegged at $15 billion and $10.34, indicating growth of 3% and 2.5% year over year, respectively. A Value Score of B further adds strength.

Let’s Delve Deeper

Given the changing consumer trends, Tractor Supply is focused on integrating its physical and digital operations to offer consumers a seamless shopping experience. The company’s omnichannel investments include curbside pickup, same-day, next-day delivery, a re-launched website and a new mobile app. Earlier, it launched Tractor Supply Visa Credit Card, which enabled customers to earn points on their everyday purchases, both in-store and anywhere Visa is accepted. The buyout of Orscheln Farm and Home also contributed to the performance.

The company’s Neighbor's Club program also bodes well. Neighbor's Club accounted for the majority of sales in the first quarter of 2024. During the quarter, TSCO significantly enhanced its Neighbor's Club offering. The company’s digital business reached another year of record sales in 2023, generating more than $1 billion in annual sales for the first time. It aims at leveraging AI technologies to boost search, redesign checkout and add a new refreshed homepage on personalization.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Regarding its store-growth initiatives, Tractor Supply is consistently focused on the expansion of its store base and incorporation of technological advancements to induce traffic and boost the overall top line. The company is well positioned to expand its store base, remaining on track to increase its domestic store to 2,500 in the long term.

In the first quarter, it opened 17 Tractor Supply stores and four Petsense by Tractor Supply stores. In 2023, TSCO also completed the rebranding of 81 Orscheln Farm and Home stores, which were acquired in 2022, to Tractor Supply. Its new store productivity in 2023 was nearly 67% of its mature store average. Management intends to continue its store-opening initiatives in 2024.

The Project Fusion is the company’s state-of-the-art space productivity program built to enrich customer experience. Another key component of the space productivity initiatives is the transformation of its Side Lot. Tractor Supply expects to complete the aforementioned Orscheln Farm and Home conversions, as well as the Project Fusion remodels and garden center transformations. The company’s Project Fusion and Side Lot model transformations have been significant investments toward stores. These store investments target higher market share and boost productivity across the existing and new stores. Notably, TSCO boasts more than 700 Project Fusion stores, accounting for 30% of its store base.

Based on the aforesaid strengths, Tractor Supply stock deserves a place in your investment portfolio.

Other Key Picks

We have highlighted three other top-ranked stocks, namely Gap GPS, American Eagle AEO and Deckers DECK.

Gap, a fashion retailer of apparel and accessories, currently sports a Zacks Rank #1 (Strong Buy). The company has a trailing four-quarter earnings surprise of 202.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Gap’s current financial-year EPS indicates growth of 17.5%, from the year-ago reported figure.

American Eagle, a leading apparel retailer, currently sports a Zacks Rank of 1. AEO delivered an earnings surprise of 28.1% in the trailing four quarters.

The consensus estimate for American Eagle’s current financial-year sales indicates growth of 3.2% from the year-ago reported figure.

Deckers, a footwear and accessories dealer, currently carries a Zacks Rank of 2. DECK delivered an earnings surprise of 42.8% in the trailing four quarters.

The Zacks Consensus Estimate for Deckers’ current financial-year sales indicates growth of 10.8% from the year-ago reported figure.

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American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report

Tractor Supply Company (TSCO) : Free Stock Analysis Report

Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report

The Gap, Inc. (GPS) : Free Stock Analysis Report

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Zacks Investment Research