TSCO - Embedded Expectations Analysis - 2020 09 08
Tractor Supply Company (TSCO:USA) currently trades near recent averages relative to UAFRS-based (Uniform) earnings, with a 23.9x Uniform P/E. At these levels, the market has expectations for profitability to remain flat, but management may be concerned about comparable store sales, digital transformation progress, and the potential of new productsSpecifically, management may lack confidence in their ability to achieve higher comparable store sales and forecast customer purchasing trends, and may be concerned about the projected level of capex spend. Moreover, they may be exaggerating the progress of their mobile app rollout, their convenience to customers, and the progress of their digital platform and service transformation. Furthermore, management may be exaggerating the potential of their new product assortments and the potential of covering the side lot in transforming productivity of stores, and they may be downplaying concerns about lower margin benefits from their product mix and promotions in H2 2020. Additionally, they may have concerns about the uncertain timeline of the economy's recovery, and the sustainability of new and re-engaged customers
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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