Stock Story -
Rural goods retailer Tractor Supply (NASDAQ:TSCO) missed analysts' expectations in Q2 CY2024, with revenue up 1.5% year on year to $4.25 billion. It made a GAAP profit of $3.93 per share, improving from its profit of $3.83 per share in the same quarter last year.
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Tractor Supply (TSCO) Q2 CY2024 Highlights:
- Revenue: $4.25 billion vs analyst estimates of $4.28 billion (small miss)
- EPS: $3.93 vs analyst expectations of $3.92 (in line)
- Company maintained the midpoint of full year same-store sales and revenue, slightly raised full year EPS (updated revenue and EPS guidance below expectations)
- Gross Margin (GAAP): 36.6%, up from 36.2% in the same quarter last year
- Free Cash Flow of $467.5 million, down 18.1% from the same quarter last year
- Locations: 2,459 at quarter end, up from 2,373 in the same quarter last year
- Same-Store Sales were flat year on year (2.5% in the same quarter last year)
- Market Capitalization: $28.3 billion
Started as a mail-order tractor parts business, Tractor Supply (NASDAQ:TSCO) is a retailer of general goods such as agricultural supplies, hardware, and pet food for the rural consumer.
Specialty RetailSome retailers try to sell everything under the sun, while others—appropriately called Specialty Retailers—focus on selling a narrow category and aiming to be exceptional at it. Whether it’s eyeglasses, sporting goods, or beauty and cosmetics, these stores win with depth of product in their category as well as in-store expertise and guidance for shoppers who need it. E-commerce competition exists and waning retail foot traffic impacts these retailers, but the magnitude of the headwinds depends on what they sell and what extra value they provide in their stores.
Sales GrowthTractor Supply is larger than most consumer retail companies and benefits from economies of scale, giving it an edge over its competitors.
As you can see below, the company's annualized revenue growth rate of 12.4% over the last five years was decent as it opened new stores and grew sales at existing, established stores.
This quarter, Tractor Supply's revenue grew 1.5% year on year to $4.25 billion, falling short of Wall Street's estimates. Looking ahead, Wall Street expects sales to grow 5% over the next 12 months, an acceleration from this quarter.
Same-Store SalesTractor Supply's demand within its existing stores has been relatively stable over the last eight quarters but fallen behind the broader consumer retail sector. On average, the company's same-store sales have grown by 1.9% year on year. With positive same-store sales growth amid an increasing physical footprint of stores, Tractor Supply is reaching more customers and growing sales.
In the latest quarter, Tractor Supply's year on year same-store sales were flat. By the company's standards, this growth was a meaningful deceleration from the 2.5% year-on-year increase it posted 12 months ago. We'll be watching Tractor Supply closely to see if it can reaccelerate growth.
Key Takeaways from Tractor Supply's Q2 Results Revenue missed by a small amount, although EPS was in line. While there were some small revisions in full year guidance, revenue and EPS outlook ultimately ended up below expectations. The stock traded down 2.9% to $254.88 immediately following the results.
