Yahoo Finance Tractor Supply (TSCO) Q1 Earnings Beat Mark, Sales Rise Y/Y
Tractor Supply Company TSCO has reported first-quarter 2024 results, wherein the bottom line beat the Zacks Consensus Estimate while sales marginally lagged the same. Both metrics increased year over year. Results benefited from higher comparable store sales (comps) performance and new store openings.
Tractor Supply’s earnings of $1.83 per share surpassed the Zacks Consensus Estimate of $1.70. In the year-earlier quarter, the company reported earnings of $1.65 per share, up 10.9% year over year.
Net sales grew 2.9% year over year to $3,394.8 million. Sales marginally missed the Zacks Consensus Estimate of $3,396 million. The increase can be attributed to the new store openings and higher comparable store sales.
Comps rose 1.1% year over year, led by a comparable average transaction count rise of 1.3% and a comparable average ticket dip of 0.2%. Comps gained from strength in seasonal merchandise, partly offset by declines for year-round discretionary categories. Consumable, usable and edible products performed in line with its overall comps increase.
The current Zacks Rank #2 (Buy) company’s shares have risen 13.9% in the past three months compared with the industry’s 2.7% growth.
Costs and Margins
Gross profit rose 4.4% to $1.22 billion and the gross margin grew 50 basis points (bps) year over year to 36%. The gross margin increase was mainly attributable to the ongoing lower transportation costs, better product cost management and the execution of an everyday low-price strategy.
Tractor Supply Company Price, Consensus and EPS Surprise
Tractor Supply Company price-consensus-eps-surprise-chart | Tractor Supply Company Quote
Selling, general and administrative (SG&A) expenses, including depreciation and amortization, as a percentage of sales, expanded 16 bps year over year to 28.2%. In dollar terms, SG&A expenses, including depreciation and amortization, rose 3.5% year over year to $957.7 million. The higher SG&A expense rate resulted from planned growth investments, including increased depreciation and amortization, and modest deleveraged fixed costs, somewhat offset by productivity improvements and disciplined cost control.
The operating income was up 7.6% year over year to $263.1 million in the first quarter. Meanwhile, the operating margin expanded 16 bps to 9.13%. We estimated an 8.6% decline in operating income for the first quarter.
Financial Position
The company ended 2023 with cash and cash equivalents of $264.1 million, long-term debt of $1.7 billion and total stockholders’ equity of $2.1 billion. It also provided cash flow from operating activities of $257.4 million in first-quarter 2024.
In the first quarter, the company incurred a capital expenditure of $157.2 million. For 2024, capital plans comprise opening nearly 80 Tractor Supply stores, continuing Project Fusion remodels and garden center transformations, introducing its 10th distribution center and opening 10-15 Petsense by Tractor Supply stores.
As of Mar 30, 2024, the company operated 2,233 Tractor Supply stores in 49 states and 202 Petsense by Tractor Supply stores across 23 states.
2024 Outlook
Based on year-to-date performance, management reaffirmed guidance for 2024.
For 2024, the company expects net sales of $14.7-$15.1 billion, with comps between a decline of 1% and growth of 1.5%. The operating margin is likely to be 9.7-10.1% for 2024. The company predicts net income of $1.06-$1.13 billion for 2024. Earnings per share are expected to be $9.85-$10.50 for 2024.
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 180.9%, 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 sales suggests growth of 0.3%, 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 22.7% in the trailing four quarters.
The Zacks Consensus Estimate for American Eagle’s current financial-year sales suggests growth of 3.3% 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 32.1% in the trailing four quarters.
The Zacks Consensus Estimate for Deckers’ current financial-year sales suggests growth of 15.9% from the year-ago reported figure.
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