Tractor Supply Company (TSCO), a seller of agricultural products, has performed very well during the COVID-19 pandemic. Many investors were concerned that the retailer would not maintain high sales after the pandemic. Accordingly, the company has updated its forecast for 2021 in light of strong growth expectations.
They sell a variety of lawn and garden equipment and pet supplies for small farmers and consumers. The Tractor product list includes various household goods, supplies, and equipment for use with machinery, cleaning products, generators, etc. The retailer noted a steady increase in demand since many people were making home improvements during the pandemic. Therefore, in 2020, the company’s sales will grow 27% year on year, while in 2019, the growth rate will be only 3%.
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Business management at Tractor Supply predicts an improved outlook for the company. Several factors were causing growth in the past quarter, such as good weather in the United States, higher prices and stimulus from government programs. As a result, consumers in March spent 40% more on like-for-like items. Further, Tractor Supply reports an increase in its market share and a more engaged customer base. Customers increased their traffic by 21%, while the cost per customer rose by 18% in the past quarter. A total of 2.5 million was raised by Tractor Supply’s all sales channels (including e-commerce), a 30% increase year-on-year.
Increased prices and strong demand for goods like trailers, fences, safes, outdoor electrical equipment and safes helped Tractor Supply’s gross margin rose to 35% in the first quarter.
As Tractor Supply is a seasonal business and heavily dependent on weather, management does not make forecasts for the full year. However, now the company sees reason for optimism since the forecast for 2021 indicates that sales will rise by 5 – 8 %, while earlier projections showed only a 1 % rise or a 2 % decline. A higher product price and more robust demand for high-value agricultural products will also assist in growing operating margins. Based on the February trade forecast of $ 6.5 to $ 6.9 per share, earnings should be between $ 7.05 and $ 7.4 per share.
In the last session, TSCO stock decreased -1.00% or $0.90. Throughout the day, shares fluctuated between $186.50 and $191.00. The number of shares that changed hands was 0.88 million, lower than the company’s 50-day daily volume of 1.19 million shares and below its YTD volume of 1.26 million. Over the past 12 months, the stock has observed an 85.94% gain, and in the last week, it declined -0.41%. Over the last six months, the stock increased by 42.28%, and over the past three months, it was up 33.06%. This stock has returned 34.16% this year. Additionally, it trades at a price-to-earnings ratio of 26.07.
