Tractor Supply (TSCO) Is Today's Roof Leaker Stock
Trade-Ideas LLC identified
(
) as a "roof leaker" (crossing below the 200-day simple moving average on higher than normal relative volume) candidate. In addition to specific proprietary factors, Trade-Ideas identified Tractor Supply as such a stock due to the following factors:
- TSCO has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $82.5 million.
- TSCO has traded 1.3 million shares today.
- TSCO is trading at 4.71 times the normal volume for the stock at this time of day.
- TSCO crossed below its 200-day simple moving average.
'Roof Leaker' stocks are worth watching because trading stocks that begin to experience a breakdown can lead to potentially massive losses. Once psychological and technical resistance barriers like the 200-day moving average are breached on higher than normal relative volume, the stock may then be subject to emotional selling from investors that can continue to drive the stock lower. Regardless of the impetus behind the price and volume action, when a stock moves with weakness and volume it can indicate the start of a new, potentially dangerous, trend.
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More details on TSCO:
Tractor Supply Company operates rural lifestyle retail stores in the United States. The stock currently has a dividend yield of 1%. TSCO has a PE ratio of 3. Currently there are 15 analysts that rate Tractor Supply a buy, 1 analyst rates it a sell, and 4 rate it a hold.
The average volume for Tractor Supply has been 967,800 shares per day over the past 30 days. Tractor Supply has a market cap of $12.4 billion and is part of the services sector and specialty retail industry. The stock has a beta of 1.13 and a short float of 5.5% with 7.12 days to cover. Shares are up 8.9% year-to-date as of the close of trading on Wednesday.
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Analysis:
rates Tractor Supply as a
. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, increase in net income, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself.
Highlights from the ratings report include:
- The revenue growth came in higher than the industry average of 6.9%. Since the same quarter one year prior, revenues rose by 10.2%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- TRACTOR SUPPLY CO has improved earnings per share by 19.0% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, TRACTOR SUPPLY CO increased its bottom line by earning $3.00 versus $2.66 in the prior year. This year, the market expects an improvement in earnings ($3.38 versus $3.00).
- The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Specialty Retail industry average. The net income increased by 16.6% when compared to the same quarter one year prior, going from $58.04 million to $67.67 million.
- Net operating cash flow has significantly increased by 72.26% to $62.55 million when compared to the same quarter last year. In addition, TRACTOR SUPPLY CO has also vastly surpassed the industry average cash flow growth rate of -2.00%.
- TSCO's debt-to-equity ratio is very low at 0.20 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.09 is very weak and demonstrates a lack of ability to pay short-term obligations.
- You can view the full Tractor Supply Ratings Report.
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