Price target raised
Yesterday, UBS raised its price target for Tractor Supply (TSCO) stock to $92 from $85. Tractor Supply is scheduled to announce its fiscal 2018 fourth-quarter results on January 31.
The rural lifestyle retail store chain’s stock has risen 6.8% this year, whereas the S&P 500 has risen 5.5%. Last year, TSCO stock rose 11.6%. Analysts’ average 12-month price target for the stock yesterday was $96.45, implying an 8.0% upside.
When Tractor Supply announced its fiscal 2018 third-quarter results[1.ended September 29] in October, it met analysts’ sales and earnings expectations. However its gross margin narrowed due to higher freight costs, and its operating margin narrowed due to planned infrastructure, labor, and technology investments. In the first nine months of fiscal 2018, the company’s sales grew 8.9% to $5.8 billion, and its same-store sales growth was 4.9%.
Sales and earnings expectations
In fiscal 2018, Tractor Supply expects sales of $7.84 billion–$7.87 billion, same-store sales growth of 4%–4.5%, and EPS of $4.23–$4.27.
Analysts expect the company’s adjusted EPS to rise 19.8% to $1.09 and its sales to grow 7.4% to $2.1 billion in fiscal 2018’s fourth quarter, and its adjusted EPS to grow 28.5% to $4.28 and its sales to rise 8.5% to $7.9 billion in fiscal 2018.
The company’s bottom-line growth in the current fiscal year is expected to be driven by higher sales and lower tax partially offset by increased wages and growth initiative investments. Tractor Supply aims to strengthen its business through its ONETractor strategy, which is focused on integrating the company’s store and online businesses to enhance consumers’ shopping experience.
As of September 29, Tractor Supply operated 1,748 Tractor Supply stores and 181 Petsense stores. The company opened 63 Tractor Supply stores and 14 Petsense stores in the first nine months of fiscal 2018, and closed one Petsense store.