|
Related Topics
|
Category: Tractor Supply Company (TSCO)
Date: 1 February 2021 Stock price of Tractor Supply Company: $141.74 We take a look at the 4th quarter 2020 earnings report of Tractor Supply Company (TSCO) the largest rural lifestyle retailer in the United States with 1,923 Tractor Supply stores in 49 states. For the quarter the group reported net sales of $2.88 billion and net income of $135.9 million.
|
|
We are incredibly proud of all the Tractor Supply team achieved in 2020 including record sales and operating performance for the year. My thanks and appreciation go out to the team for their support of each other, our customers and our longstanding commitment to the rural lifestyle. ” said Hal Lawton, Tractor Supply’s President and Chief Executive Officer."
More About Tractor Supply Company (TSCO)
Tractor Supply Company (NASDAQ: TSCO), the largest rural lifestyle retailer in the United States, has been passionate about serving its unique niche, as a one-stop shop for recreational farmers, ranchers and all those who enjoy living the rural lifestyle, for more than 80 years.
Tractor Supply offers an extensive mix of products necessary to care for home, land, pets and animals with a focus on product localization, exclusive brands and legendary customer service that addresses the needs of the Out Here lifestyle. With more than 42,000 Team Members, the Company leverages its physical store assets with digital capabilities to offer customers the convenience of purchasing products they need anytime, anywhere and any way they choose at the everyday low prices they deserve. At December 26, 2020, the Company operated 1,923 Tractor Supply stores in 49 states and an e-commerce website at www.TractorSupply.com.
Tractor Supply Company also owns and operates Petsense, a small-box pet specialty supply retailer focused on meeting the needs of pet owners, primarily in small and mid-size communities, and offering a variety of pet products and services. At December 26, 2020, the Company operated 182 Petsense stores in 25 states
Tractor Supply offers an extensive mix of products necessary to care for home, land, pets and animals with a focus on product localization, exclusive brands and legendary customer service that addresses the needs of the Out Here lifestyle. With more than 42,000 Team Members, the Company leverages its physical store assets with digital capabilities to offer customers the convenience of purchasing products they need anytime, anywhere and any way they choose at the everyday low prices they deserve. At December 26, 2020, the Company operated 1,923 Tractor Supply stores in 49 states and an e-commerce website at www.TractorSupply.com.
Tractor Supply Company also owns and operates Petsense, a small-box pet specialty supply retailer focused on meeting the needs of pet owners, primarily in small and mid-size communities, and offering a variety of pet products and services. At December 26, 2020, the Company operated 182 Petsense stores in 25 states
Overview of Tractor Supply Corporation 4th quarter 2020 earnings report
- Company Achieves Record Sales and Earnings for Fiscal 2020
- Fourth Quarter Net Sales Increased 31.3%; Fourth Quarter Comparable Store Sales Increased 27.3%
- Fiscal Year Net Sales Increased 27.2%; Fiscal Year Comparable Store Sales Increased 23.1%
- Company Recorded Non-Cash Pre-Tax Impairment Charges of $74.1 million, or $0.49 per diluted share after-tax, related to the Petsense Business
- Fourth Quarter Diluted Earnings per Share (“EPS”) of $1.15 and Adjusted Diluted EPS of $1.641
- Fiscal Year 2020 Diluted EPS of $6.38 and Adjusted Diluted EPS of $6.871
- Company Provides Fiscal 2021 Diluted EPS Outlook of $6.50 to $6.90
- Board of Directors Increases Quarterly Dividend by 30% to $0.52 per share
Fourth Quarter 2020 Highlights
Net sales increased 31.3% to $2.88 billion in the fourth quarter of 2020 from $2.19 billion in the fourth quarter of 2019. Comparable store sales increased 27.3% versus an increase of 0.1% in the prior year’s fourth quarter. The COVID-19 pandemic continued to have a significant, positive impact on consumer demand in the fourth quarter of 2020 across all of the Company’s major product categories as customers focused on the care of their homes, land and animals. Comparable store sales for the fourth quarter 2020 were driven by comparable average transaction count and ticket growth of 14.3% and 13.0%, respectively. The comparable store sales results also reflect a strong demand for everyday merchandise, including consumable, usable and edible products, and robust growth for seasonal categories. All geographic regions of the Company had robust comparable store sales growth. In addition, the Company’s e-commerce sales experienced triple-digit percentage growth for the third consecutive quarter.
Gross profit increased 34.2% to $995.5 million from $741.8 million in the fourth quarter of 2019, and gross margin rate increased 75 basis points to 34.6% from 33.8% in the prior year’s fourth quarter. The increase in gross margin was primarily attributable to a lower depth and frequency of sales promotions and less clearance activity, partially offset by higher transportation costs as a percent of net sales.
Selling, general and administrative (SG&A) expenses, including depreciation and amortization and asset impairment, increased 47.1% to $811.1 million from $551.4 million in the fourth quarter of 2019. As a percent of net sales, SG&A expenses increased 302 basis points to 28.2% from 25.2% in the prior year’s fourth quarter. The fourth quarter of 2020 results include non-cash impairment charges for the Petsense business of $74.1 million due primarily to a strategic reassessment of the business and a decision to reduce the number of new store openings planned over the long term and, to a lesser extent, the impairment of long-lived assets at underperforming locations. On an adjusted basis excluding the impact of the discrete impairment charges, SG&A expenses increased 33.7% to $737.0 million, or 46 basis points to 25.6% as a percent of net sales for the fourth quarter of 2020. The increase in adjusted SG&A as a percent of net sales was primarily attributable to incremental costs related to the COVID-19 pandemic, increased incentive compensation due to record sales and profit performance in the quarter with the majority allocated to the store teams, and investments in strategic initiatives. Additional costs incurred due to the COVID-19 pandemic include appreciation bonuses to Team Members in the Company’s stores and distribution centers as well as additional labor hours and supply costs dedicated to cleaning and sanitation to enhance the health and safety of Team Members and customers.
The effective income tax rate was 23.0% compared to a rate of 22.3% in the prior year’s fourth quarter. Net income was $135.9 million, or $1.15 per diluted share, compared to net income of $144.2 million, or $1.21 per diluted share, in the fourth quarter of 2019. On an adjusted basis, net income was $193.2 million, or $1.64 per diluted share, in the fourth quarter of 2020.
The Company opened 19 new Tractor Supply stores and three new Petsense stores and closed four Petsense stores in the fourth quarter of 2020
Tractor Supply Company management commentary on their 4th quarter 2020 earnings report
BRENTWOOD, Tenn.--(BUSINESS WIRE)-- Tractor Supply Company (NASDAQ: TSCO), the largest rural lifestyle retailer in the United States, today announced financial results for its fourth quarter and fiscal year ended December 26, 2020.
“We are incredibly proud of all the Tractor Supply team achieved in 2020 including record sales and operating performance for the year. My thanks and appreciation go out to the team for their support of each other, our customers and our longstanding commitment to the rural lifestyle. Our team remained agile in a challenging operating environment as we experienced unprecedented demand and welcomed a record number of new and reengaged customers to Tractor Supply,” said Hal Lawton, Tractor Supply’s President and Chief Executive Officer. “The team has done an exemplary job operating the business at elevated rates in the midst of a global pandemic, all while laying the foundation for our Life Out Here Strategy. Going forward, we believe our resilient business model with a differentiated and loyal customer base, our strategic investments to capture growth opportunities and the strength of our balance sheet position us to capitalize on the momentum in our business in 2021 and beyond.”
Lawton continued, “The 30% increase in our quarterly dividend by the Board of Directors and our recently resumed share repurchase program reflect our strong earnings performance and robust cash flows in 2020 and confidence in our business, as well as our ongoing commitment to total shareholder return.”
“We are incredibly proud of all the Tractor Supply team achieved in 2020 including record sales and operating performance for the year. My thanks and appreciation go out to the team for their support of each other, our customers and our longstanding commitment to the rural lifestyle. Our team remained agile in a challenging operating environment as we experienced unprecedented demand and welcomed a record number of new and reengaged customers to Tractor Supply,” said Hal Lawton, Tractor Supply’s President and Chief Executive Officer. “The team has done an exemplary job operating the business at elevated rates in the midst of a global pandemic, all while laying the foundation for our Life Out Here Strategy. Going forward, we believe our resilient business model with a differentiated and loyal customer base, our strategic investments to capture growth opportunities and the strength of our balance sheet position us to capitalize on the momentum in our business in 2021 and beyond.”
Lawton continued, “The 30% increase in our quarterly dividend by the Board of Directors and our recently resumed share repurchase program reflect our strong earnings performance and robust cash flows in 2020 and confidence in our business, as well as our ongoing commitment to total shareholder return.”
Fiscal 2021 Outlook
The impact that the COVID-19 pandemic will have on the broader economy and the Company’s fiscal 2021 results remains uncertain. Given the nature of the COVID-19 pandemic on the macro economy and the consumer, the Company is planning for fiscal 2021 based on a range of potential outcomes. The Company is providing the following initial guidance for the results of operations expected for fiscal 2021:
The Company’s diluted EPS guidance assumes an estimated effective income tax rate of 22.5% to 22.8%.
Share repurchases for fiscal 2021 are expected to reduce diluted weighted average shares outstanding by one to two percent. Anticipated capital expenditures include new store growth of approximately 80 new Tractor Supply and 10 new Petsense store openings.
The Company continues to have a strong liquidity position with current cash and cash equivalents of approximately $1.34 billion and no amounts drawn on its $500 million revolving credit facility as of December 26, 2020.
Quarterly Dividend
Tractor Supply’s Board of Directors declared a quarterly cash dividend per share of the Company’s common stock of $0.52, which is a 30% increase over the prior quarterly dividend. The dividend will be paid on March 9, 2021, to stockholders of record of the Company’s common stock as of the close of business on February 22, 2021.
The impact that the COVID-19 pandemic will have on the broader economy and the Company’s fiscal 2021 results remains uncertain. Given the nature of the COVID-19 pandemic on the macro economy and the consumer, the Company is planning for fiscal 2021 based on a range of potential outcomes. The Company is providing the following initial guidance for the results of operations expected for fiscal 2021:
- Net Sales: $10.7 billion - $11.0 billion
- Comparable Store Sales: (2.0%) - +1.0%
- Operating Margin Rate: 9.3% to 9.6%
- Net Income: $750 million - $800 million
- Earnings per Diluted Share: $6.50 - $6.90
- Capital Expenditures: $450 million - $550 million
The Company’s diluted EPS guidance assumes an estimated effective income tax rate of 22.5% to 22.8%.
Share repurchases for fiscal 2021 are expected to reduce diluted weighted average shares outstanding by one to two percent. Anticipated capital expenditures include new store growth of approximately 80 new Tractor Supply and 10 new Petsense store openings.
The Company continues to have a strong liquidity position with current cash and cash equivalents of approximately $1.34 billion and no amounts drawn on its $500 million revolving credit facility as of December 26, 2020.
Quarterly Dividend
Tractor Supply’s Board of Directors declared a quarterly cash dividend per share of the Company’s common stock of $0.52, which is a 30% increase over the prior quarterly dividend. The dividend will be paid on March 9, 2021, to stockholders of record of the Company’s common stock as of the close of business on February 22, 2021.
Tractor Supply Company (TSCO) stock price chart the last 5 years
The image below shows the stock price history of Tractor Supply Company (TSCO) over the last 5 years. And its been a good time for Tractor Supply Company stockholders with the stock increasing sharply by 65.80% over the last 5 years.
The stock of Tractor Supply Company is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Tractor Supply Company stock is positive at this point in time.
The stock of Tractor Supply Company is trading at closer to its 52 week high than it is to its 52 week low which is a clear indication that the short term sentiment and momentum of Tractor Supply Company stock is positive at this point in time.
Tractor Supply Company (TSCO) stock vs Walmart (WMT) stock over the last 5 years
The image below shows the stock price performance of Tractor Supply Company (TSCO) and Walmart (WMT). One is the largest retailer in the world and the other the largest rural lifestyle retailer in the world. The summary below shows the stock price returns of these two firms over the last 5 years.
Walmart (WMT) stock has easily outperformed that of Tractor Supply Company over the last 5 years
- Walmart: 106.5%
- Tractor Supply Company: 65.8%
Walmart (WMT) stock has easily outperformed that of Tractor Supply Company over the last 5 years
Latest stock valuation of Tractor Supply Company (TSCO)
So what is Tractor Supply Company (TSCO) stock worth based on their 4th quarter 2020 earnings report? Based on their earnings report our valuation model provides a target price (full value price) for Tractor Supply Company at $132.40 a stock.
We therefore believe the stock of Tractor Supply Company is slightly overvalued at its current price of $141.70
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $132.40, thus a good entry point into Tractor Supply Company would be at $119.20 or below.
We expect the stock of Tractor Supply Company to pull back slightly from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is slightly overvalued. As its trading at pretty close to our target price we rate the stock of Tractor Supply Company as hold.
We therefore believe the stock of Tractor Supply Company is slightly overvalued at its current price of $141.70
We usually recommend long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price), which in this case is $132.40, thus a good entry point into Tractor Supply Company would be at $119.20 or below.
We expect the stock of Tractor Supply Company to pull back slightly from current levels in coming weeks and months to levels closer to our target price (full value price), as their stock is price is slightly overvalued. As its trading at pretty close to our target price we rate the stock of Tractor Supply Company as hold.
Next earnings release of Tractor Supply Company (TSCO)
It is expected that Tractor Supply Company (TSCO) will release their 1st quarter 2021 earnings report in late April 2021
Related Topics