Tractor Supply Beats - Analyst Blog

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), a leading retail farm and ranch store brand, recorded another quarter of growth. Earnings per share in the second quarter of fiscal 2010 came in at $2.05, which inched past the Zacks Consensus Estimate of $2.03 as well as the prior-year quarter earnings of $1.50. Results improved on the heels of good inventory and markdown management.

Strong performance in consumable, usable and edible categories − for instance, pet food and animal feed − acted as a catalyst for a 6.9% increase in traffic trends. This bolstered same-store sales growth of 6.1% from a decrease of 2.7% in the prior-year quarter. Tractor Supply has been witnessing increasing trends in same-store sales. After waning 5.1% in the third quarter of 2009, it grew 0.7% and 2.8% in two consecutive quarters, respectively.


Tractor Supply had suffered setbacks during the recession as buyers avoided big-ticket purchases such as mowers, but results have improved in the recent quarter. The company’s impressive merchandising improvement strategy and solid same-store sales trend resulted in a double-digit top-line growth of the company. Net sales in the quarter surged 12.6% to $1,070 million from $946.5 million in the prior-year quarter.

Aided by an inflated margin of direct products, continued improvements in shrink and a cut in last-in-first-out (LIFO) charges, gross profit surged 18.7% to $358.8 million compared with $302.2 million in the prior-year quarter.

Better expense management and double-digit top-line growth resulted in a 40 basis points of improvement in selling and administration expenses, as a percentage of sales, which came in at 22.2% versus 22.6% in the prior-year quarter. Tractor Supply earned $76.5 million in the quarter, far exceeding the prior-year quarter net income of $54.8 million.

Tractor Supply’s balance sheet had cash and cash equivalents of $181.1 million at the end of the quarter compared with $91.8 million in the year-ago period. Stockholders’ equity came in at $816.4 million compared with $664.4 million in prior-year quarter. The company generated $70.9 million in cash from operations.

In the quarter under review, Tractor opened 19 new stores. The company currently runs 967 stores in 44 states. 


Tractor is well positioned to capitalize on positive long-term trends. The company now expects sales for fiscal 2010 to range between $3.49 billion and $3.53 billion compared with the previous estimate of $3.44 billion to $3.50 billion. Same-store sales are now expected to improve 2.5% to 3.5% compared with the previous guidance of 1% to 3%.


On the back of perked-up results and brighter sales trends, Tractor Supply expects net income in 2010 to range between $4.00 and $4.10 per share. The Zacks Consensus Estimate for 2010 is currently pegged at $4.08 per share, which jumped 36 cents over the last 30 days. For the next quarter and fiscal 2011, the Zacks Consensus Estimate stands at 72 cents and $4.57, respectively.