TSCO - Embedded Expectations Analysis - 2020 06 19
Tractor Supply Company (TSCO:USA) currently trades near recent averages relative to UAFRS-based (Uniform) earnings, with a 21.4x Uniform P/E. At these levels, the market has expectations for profitability to remain flat, and management may be concerned about their digitalization efforts, customer retention, and growth opportunitiesSpecifically, management may lack confidence in their ability to sustain comp store sales growth, maintain new customer growth, and execute their digitalization efforts. In addition, they may have concerns about their customer retention rate, their ability to continue to decrease SG&A as a percentage of net sales, and softness in oil demand. Furthermore, they may lack confidence in their ability to have best-in-class solutions, support their team members and communities during the crisis through Tractor Supply Foundation, and invest in the future. Meanwhile, management may have concerns about the sustainability of pet food, propane, homesteading, and fence management performance
Tractor Supply is a rural lifestyle retailer. The company is focused on supplying the needs of recreational farmers, ranchers and all those who enjoy living the rural lifestyle, as well as tradesmen and small businesses. The company operates retail stores under the names Tractor Supply Company, Del's Feed & Farm Supply, and Petsense and operates websites under the names TractorSupply.com and Petsense.com. The company's selection of merchandise is comprised of the following main product categories: equine, livestock, pet, and small animal products; hardware, truck, towing, and tool products; seasonal products; work/recreational clothing and footwear; and maintenance products for agricultural and rural use.
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