NEW YORK (TheStreet) -- Tractor Supply (TSCO) shares were upgraded to "outperform" from "neutral" by analysts at Credit Suisse (CS), who also slashed their price target to $70 from $74.
Tractor Supply shares are down -5.5% to $57.99 on Thursday after the company lowered its second quarter revenue and earnings expectations.
The company forecast revenue for the quarter to be $1.58 billion, just below Thomson Reuters analysts consensus $1.6 billion expectations, with an EPS between 94 cents and 95 cents, well below analysts $1.02 per share expectations.
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Analysts at the firm believe that the farm and ranch supply retailer is well positioned for growth despite Tractor Supply's own lowered outlook.
TheStreet Ratings team rates TRACTOR SUPPLY CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate TRACTOR SUPPLY CO (TSCO) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, growth in earnings per share, notable return on equity, good cash flow from operations and increase in net income. We feel these strengths outweigh the fact that the company shows low profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The revenue growth came in higher than the industry average of 1.4%. Since the same quarter one year prior, revenues slightly increased by 9.0%. 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 12.9% 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 $2.33 versus $1.90 in the prior year. This year, the market expects an improvement in earnings ($2.61 versus $2.33).
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Specialty Retail industry and the overall market, TRACTOR SUPPLY CO's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Net operating cash flow has significantly increased by 60.04% to -$38.08 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 -3.80%.
- The net income growth from the same quarter one year ago has exceeded that of the Specialty Retail industry average, but is less than that of the S&P 500. The net income increased by 10.9% when compared to the same quarter one year prior, going from $44.01 million to $48.81 million.
- You can view the full analysis from the report here: TSCO Ratings Report