Tractor Supply's Improving June Results Come Too Late To Save Q2

Tractor Supply Company TSCO preannounced disappointing 2Q16 EPS, comps and gross margin. Although performance recovered in June, it was not enough to offset the setback of April and May, JPMorgan’s Christopher Horvers said in a report. He maintained an Overweight rating on the company, while reducing the price target from $105 to $103.

Analyst Christopher Horvers mentioned that the 2Q results were impacted by seasonal factors, and that the 2H view remained intact.

Guidance Reduced

Tractor Supply reduced its EPS projected from $3.40-$3.48 to $3.35-$3.40, based solely on the 2Q miss. Moreover, the company has been conservative is not reflecting any benefit of the seasonal shift into 3Q.

Related Link: BTIG Analysts Still Positive On Tractor Supply

2H Intact

The company’s performance in June was in-line with expectations, and the 2H prospects remain intact. The Southeast and West geographies witnessed more normal weather and were up low-single-digit, while the North and South regions declined.

“Notably, each month of the quarter saw better trends sequentially with June “meeting plan” (but not enough to make up for the April-May shortfall),” Horvers wrote. Also worth noting is that traffic rose 1.5 percent, despite the seasonal pressure, while the Livestock and Pet category delivered mid-single-digit comps in all three months of the quarter.

“In our follow up, TSCO also noted that to start the year it said it expected each quarter to be in the 3.5%- 5.0% range and that comment is still relevant to the back half,” the analyst added.