Tractor Supply (TSCO, Financial) recently saw its price target cut by Guggenheim from $60 to $55, though the firm maintains a Buy rating on the stock. The adjustment follows the company's first-quarter financial performance, which did not meet the firm's expectations.
Tractor Supply reported a $64 million shortfall in top-line revenue, which Guggenheim attributes primarily to the delayed start of the 2025 spring selling season. The company also provided guidance for second-quarter comparable sales, indicating they may remain flat or decline by up to 1%. This, too, fell short of Guggenheim’s earlier projections.
Despite these results, the analyst suggests that the recent 3.4% drop in the stock's value was largely influenced by what was described as management's complicated narrative regarding tariffs. Overall, Guggenheim continues to see long-term potential in Tractor Supply, as evidenced by their maintained Buy rating.
TSCO Key Business Developments
Release Date: January 30, 2025
- Net Sales Growth (Q4): 3.1% increase.
- Comparable Store Sales (Q4): 0.6% increase.
- Diluted EPS (Q4): $0.44.
- Net Sales (Fiscal Year 2024): Nearly $14.9 billion, 2.2% growth from 2023.
- Comparable Store Sales (Fiscal Year 2024): 0.2% increase.
- Diluted EPS (Fiscal Year 2024): $2.04 on a split adjusted basis.
- Digital Sales (Fiscal Year 2024): Over $1.1 billion.
- Operating Cash Flow (Fiscal Year 2024): $1.4 billion.
- New Store Openings (2024): 80 Tractor Supply stores and 11 Petsense stores.
- Dividend Growth: 15th consecutive year.
- Gross Margin (Q4): 35.2%, a decrease of 9 basis points.
- SG&A Expenses (Q4): Increased 60 basis points to 26.8% of net sales.
- Operating Margin (Q4): 8.4%, a decline of 69 basis points.
- Net Sales Forecast (2025): $15.6 billion to $15.9 billion, 5% to 7% growth.
- Comparable Store Sales Forecast (2025): 1% to 3% increase.
- Capital Expenditures (2025): $650 million to $725 million.
- Share Repurchases (2025): $525 million to $600 million.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tractor Supply Co (TSCO, Financial) achieved record financial results for the fiscal year 2024, with net sales nearly reaching $14.9 billion and a record diluted EPS of $2.04.
- The company opened 80 new Tractor Supply stores and 11 Petsense stores in 2024, demonstrating strong expansion efforts.
- Tractor Supply Co (TSCO) returned over $1 billion to shareholders through dividends and share repurchases for the fourth consecutive year.
- The Neighbor's Club loyalty program continues to grow, with membership now exceeding 38 million and representing 80% of sales.
- The acquisition of Allivet is expected to expand Tractor Supply Co (TSCO)'s total addressable market by $15 billion, enhancing its offerings to pet owners.
Negative Points
- Comparable store sales growth was modest at 0.2% for the fiscal year, indicating challenges in driving same-store sales.
- The company faced a 69 basis point decline in operating margin for the fourth quarter, attributed to planned growth investments and modest deleverage of fixed costs.
- Deflation in key product categories, particularly commodity-based products, posed a headwind, with an estimated 100 basis point drag on comp sales performance in the quarter.
- The warm weather in November and December negatively impacted winter seasonal business, affecting sales in categories like insulated outerwear and heating.
- Tractor Supply Co (TSCO) anticipates continued SG&A deleverage in 2025 due to increased depreciation and investments in strategic initiatives.
