Tractor Supply Up 18.6% in a Year: Here's Why the Stock is Apt to Hold

Tractor Supply Company TSCO has been doing well for a while now, thanks to its sturdy business strategies. Given the changing consumer trends, TSCO is focused on integrating its physical and digital operations to offer consumers a seamless shopping experience. The company’s omnichannel investments also bode well.Tractor Supply is reaping benefits from its Life Out Here Strategy and the Neighbor’s Club membership program. Its ‘ONETractor’ strategy, which is aimed at connecting stores and online shopping, appears encouraging too. Buoyed by such drivers, shares of this leading rural retail farm and ranch store chain have gained 18.6% in a year, outperforming the industry’s 10% growth.Image Source: Zacks Investment ResearchTSCO’s Growth StrategiesRegarding TSCO’s store-growth initiatives, it is persistently focused on the expansion of its store base and the incorporation of technological advancements to boost traffic and drive the top line. The Project Fusion is the company’s state-of-the-art space productivity program built to enrich customer experience in the mature store base. Management intends to continue its store-opening initiatives ahead.TSCO is significantly enhancing its Neighbor's Club offering. As the company continues to make investments in the program, it has been seeing strong growth in customer counts and customer retention. In the most recent quarter, the Neighbor's Club comp sales surpassed its overall sales. Tractor Supply has reached an all-time high in its sales penetration, recording membership of more than 37 million . Tractor Supply’s omnichannel investments include curbside pickup, same day, next-day delivery, a re-launched website and a new mobile app. Management aims at leveraging AI technologies to boost search, redesign checkout and add a new refreshed homepage on personalization. It has been accelerating its digital capabilities, which has been leading to higher customer engagement and improved conversion rate.In the latest launch, the company has rolled out an exclusive 4health line of premium pet food. The offering enhances the retailer’s 4health exclusive brand with top pet products at convenient value. 4health Shreds is a dog food product, which blends crunchy kibble with protein-packed shreds, offering a balanced nutrition. Tractor Supply has concluded its buyout of Allivet, a privately held online pet pharmacy. The transaction marks a significant strategic move as it expands the company’s footprint in the growing pet wellness and animal health sector. All the aforesaid efforts are likely to tap higher sales and boost profitability.Bumps in TSCO’s Growth PathDespite such growth catalysts, Tractor Supply is reeling under higher depreciation and amortization along with the costs related to the opening of a distribution center. Also, cost inflation and a tepid retail sales environment are concerning. The higher selling, general and administrative (SG&A) expense rate has been resulting from growth investments, which comprised the onboarding of a new distribution center, lapping a one-time depreciation cost benefits and modest deleveraged fixed costs. Such costs might weigh upon the company’s profitability.ConclusionNevertheless, TSCO has been making cost-saving initiatives to tackle cost issues. Analysts seem quite optimistic about the company. The Zacks Consensus Estimate for 2025 sales and earnings per share is currently pegged at $15.62 billion and $2.18, respectively. These estimates indicate corresponding growth of 4.7% and 6.3% year over year. Tractor Supply currently carries a Zacks Rank #3 (Hold).Key PicksWe have highlighted three better-ranked stocks, namely Deckers DECK, Boot Barn BOOT and Urban Outfitters URBN.Deckers, a footwear and accessories dealer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for Deckers’ current financial-year sales indicates growth of 13.6% from the year-ago figure. DECK delivered an average earnings surprise of 41.1% in the trailing four quarters.Boot Barn, a lifestyle retail chain devoted to western and work-related footwear, apparel and accessories, currently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 6.8%, on average. The Zacks Consensus Estimate for Boot Barn’s current financial-year sales indicates growth of 13.4% from the year-ago figure.Urban Outfitters, a fashion lifestyle specialty retailer, currently carries a Zacks Rank of 2. URBN delivered an average earnings surprise of 22.8% in the trailing four quarters.The consensus estimate for Urban Outfitters’ current financial-year sales indicates growth of 6.6% from the year-ago figure.Zacks Names #1 Semiconductor StockIt's only 1/9,000th the size of NVIDIA which skyrocketed more than +800% since we recommended it. NVIDIA is still strong, but our new top chip stock has much more room to boom.With strong earnings growth and an expanding customer base, it's positioned to feed the rampant demand for Artificial Intelligence, Machine Learning, and Internet of Things. Global semiconductor manufacturing is projected to explode from $452 billion in 2021 to $803 billion by 2028.See This Stock Now for Free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Tractor Supply Company (TSCO): Free Stock Analysis Report Deckers Outdoor Corporation (DECK): Free Stock Analysis Report Urban Outfitters, Inc. (URBN): Free Stock Analysis Report Boot Barn Holdings, Inc. (BOOT): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks