Tractor Supply Profit Stronger Than Expected but Shares Lower

Tractor Supply shares fell even after the rural-lifestyle retailer posted stronger-than-expected third-quarter earnings.
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Tractor Supply  (TSCO) - Get Report shares fell Thursday even after the rural-lifestyle retailer posted stronger-than-expected third-quarter earnings.

Shares of the Brentwood, Tenn., company recently traded at $139.13, down 6.7%. They have jumped 48% in 2020 to date. 

Net income was $190.6 million, or $1.62 a share, up from $122.1 million, or $1.02, in the year-earlier quarter. The FactSet analyst consensus called for EPS of $1.37 in the latest quarter.

Revenue registered $2.61 billion, up 32% from $1.98 billion in the year-earlier quarter. The FactSet consensus: sales of $2.42 billion.

Comparable sales surged 26.8% in the latest quarter, topping the analyst consensus of 18.5%.

The comparable sales "also reflect a strong demand for every-day merchandise, including consumable, usable and edible products, and robust growth for summer seasonal categories," Tractor Supply said. 

"All geographic regions ... had robust comparable-store sales growth." And e-commerce sales saw triple-digit-percentage growth.  

For the fourth quarter, Tractor Supply forecast earnings per share of $1.37 to $1.47, revenue of $2.6 billion to $2.7 billion and comparable sales growth of 15% to 20%.

All the forecasts beat the analyst consensus calls: $1.36 for EPS, $2.46 billion for sales and 9% for same-store-sales growth.

“Our fundamentals are strong as we continue to gain market share across existing, new and reengaged customers,” Tractor Supply Chief Executive Hal Lawton said in a statement. 

Morningstar analyst Jaime Katz wrote in July that “Tractor Supply’s brand and product mix have built a loyal following of recreational farmers, ranchers, and those participating in the rural lifestyle, supporting a narrow moat built on a solid brand intangible asset.” 

But she pegged fair value for TSCO at $109.