Tractor Supply Drops 3% on Q3 Miss & Lowered Guidance

Tractor Supply Company (NASDAQ:TSCO) shares rose more than 3% on Monday after Mizuho analysts upgraded the stock to Outperform from Neutral, raising the price target to $60 from $54. The upgrade reflects growing confidence in the company’s ability to leverage rebounding trends and operational improvements for sustained growth.

Tractor Supply is positioned to capitalize on a recovery in its pet segment, which accounts for approximately 25% of its sales, alongside the stabilization of commodity prices impacting its animal feed business, another 25% of revenue. The recent pullback in the stock, following the company’s analyst day in early December, presents an attractive entry point into a business model that continues to improve.

The company has outlined achievable financial targets, including comparable sales growth of 3%-5% annually and EPS growth of 8%-11%, supported by a low-single-digit comparable sales increase forecast for fiscal 2025. Operating margins are expected to exceed 11%, surpassing the current guidance of 10.5%, driven by several factors. These include a profit boost of $130-$150 million from its expanding retail media business, a $50 million opportunity within exclusive brands, and contributions from its growing pet prescription and healthcare segment following the acquisition of Allivet.

Tractor Supply Company (NASDAQ:TSCO) shares rose more than 3% on Monday after Mizuho analysts upgraded the stock to Outperform from Neutral, raising the price target to $60 from $54. The upgrade reflects growing confidence in the company’s ability to leverage rebounding trends and operational improvements for sustained growth.

Tractor Supply is positioned to capitalize on a recovery in its pet segment, which accounts for approximately 25% of its sales, alongside the stabilization of commodity prices impacting its animal feed business, another 25% of revenue. The recent pullback in the stock, following the company’s analyst day in early December, presents an attractive entry point into a business model that continues to improve.

The company has outlined achievable financial targets, including comparable sales growth of 3%-5% annually and EPS growth of 8%-11%, supported by a low-single-digit comparable sales increase forecast for fiscal 2025. Operating margins are expected to exceed 11%, surpassing the current guidance of 10.5%, driven by several factors. These include a profit boost of $130-$150 million from its expanding retail media business, a $50 million opportunity within exclusive brands, and contributions from its growing pet prescription and healthcare segment following the acquisition of Allivet.

Tractor Supply Company (NASDAQ:TSCO) is a leading retail chain specializing in products for home improvement, agriculture, lawn and garden maintenance, and livestock, equine, and pet care. The company has carved a niche in the retail sector, competing with other giants like Home Depot and Lowe's. Despite being a brick-and-mortar retailer, TSCO has demonstrated impressive growth.

On December 20, 2024, TSCO underwent a 1-for-5 stock split. This strategic move follows a period of significant stock value appreciation, with the company's stock tripling over the past five years. Such growth is often seen in tech sectors, making TSCO's achievement in the retail space particularly impressive. The stock split aims to make shares more affordable and accessible to a broader range of investors.

Prior to the split, TSCO's stock was trading at nearly $300 per share. The split reduced the trading price to approximately $60 per share, aligning with the company's goal of increasing investor accessibility. This move places TSCO alongside other major companies like Tesla, Nvidia, and Chipotle Mexican Grill, which have also recently split their stocks to attract more investors.

The trading volume for TSCO today is 1,468,055 shares on the NASDAQ exchange. This level of activity suggests continued investor interest and confidence in the company's long-term growth prospects. As TSCO continues to expand its market presence, the stock split is expected to further enhance its appeal to a diverse investor base.

Tractor Supply Company (NASDAQ:TSCO) is a leading retail chain specializing in products for home improvement, agriculture, lawn and garden maintenance, and livestock, equine, and pet care. The company has carved a niche in the retail sector, competing with other giants like Home Depot and Lowe's. Despite being a brick-and-mortar retailer, TSCO has demonstrated impressive growth.

On December 20, 2024, TSCO underwent a 1-for-5 stock split. This strategic move follows a period of significant stock value appreciation, with the company's stock tripling over the past five years. Such growth is often seen in tech sectors, making TSCO's achievement in the retail space particularly impressive. The stock split aims to make shares more affordable and accessible to a broader range of investors.

Prior to the split, TSCO's stock was trading at nearly $300 per share. The split reduced the trading price to approximately $60 per share, aligning with the company's goal of increasing investor accessibility. This move places TSCO alongside other major companies like Tesla, Nvidia, and Chipotle Mexican Grill, which have also recently split their stocks to attract more investors.

The trading volume for TSCO today is 1,468,055 shares on the NASDAQ exchange. This level of activity suggests continued investor interest and confidence in the company's long-term growth prospects. As TSCO continues to expand its market presence, the stock split is expected to further enhance its appeal to a diverse investor base.

Evercore ISI analysts adjusted their price target for Tractor Supply Company (NASDAQ:TSCO) from $245.00 to $240.00, while continuing to recommend an Outperform rating.

The analysts added Tractor Supply to Evercore ISI's Tactical Underperform List, citing concerns about deflation and warmer-than-usual temperatures that lead to a more cautious short-term outlook. Tractor Supply is set to announce its fourth-quarter earnings on Thursday.

Long-term, the analysts view the company as a favorable pick within the Broadlines & Hardlines sector, citing its store growth potential, opportunities for market share gains, margin growth, and strong free cash flow of over $500 million.

However, the analysts believe that the consensus estimates for 2024 are too optimistic. They lowered their below-consensus forecasts for fourth-quarter comparable sales and 2024 EPS to -5% (compared to the street's -3.9%) and $10, respectively, which is flat year-over-year and lower than the consensus EPS of $10.36.

In summary, while the analysts favor the stock in the longer term, they feel that current market expectations for 2024 are overly optimistic and that the stock price, given its high earnings multiple, could face more downside risk leading up to the earnings announcement.

Tractor Supply (NASDAQ:TSCO) shares fell by over 3% intra-day today after the company reported worse-than-expected third-quarter earnings and cut its guidance.

Q3 EPS of $2.25 came in less than the anticipated $2.29 by analysts. The quarterly revenue stood at $3.41 billion, falling short of the expected $3.47 billion.

Additionally, Tractor Supply has revised its forecast for the full year 2023. The new projected EPS is between $10.00 and $10.10, down from the earlier prediction of $10.20 to $10.40. This is also below the Street estimate of $10.22. The company's revenue expectation for fiscal 2023 is now between $14.5 billion to $14.6 billion, reduced from the previous range of $14.8 billion to $14.9 billion, and below the Street consensus of $14.82 billion.