On Tuesday, Evercore ISI maintained a positive outlook on Tractor Supply Company (NASDAQ:TSCO) stock, reiterating an Outperform rating and a $275.00 price target. The firm anticipates the company's first-quarter earnings report, set for April 25, to reflect Tractor Supply's status as a top pick in the Broadlines & Hardlines sector.
With substantial opportunities for unit growth, market share gains, and margin expansion, the company is well-positioned, supported by over $600 million in free cash flow (FCF).
Tractor Supply's stock has seen an 18% increase year-to-date (YTD), surpassing the broader market's 5% gain over the same period. The firm's analysis suggests that the company's performance, coupled with expected positive comparable sales in the first quarter, supports a balanced risk/reward scenario leading into the earnings release.
The analyst noted that despite some volatility due to weather comparisons, indicators such as shopping intentions and web traffic are robust, hinting at further market share gains.
The company is expected to report 0.5% comparable growth and maintain stable margin expectations for the first quarter, which would likely allow management to confirm its full-year guidance.
The strong projection for free cash flow growth further underpins the belief that Tractor Supply deserves a valuation premium over the market. Applying a 30% premium to Evercore ISI's 2025 earnings per share estimate of $11.65 leads to the established $275 price target.
In summary, the firm's stance on Tractor Supply is buoyed by the company's consistent market outperformance, healthy financial indicators, and strategic growth initiatives. The upcoming earnings report is anticipated to solidify the company's trajectory and justify its premium valuation in the eyes of investors.
InvestingPro Insights
As Tractor Supply Company (NASDAQ:TSCO) approaches its first-quarter earnings report, insights from InvestingPro reinforce the positive sentiment around the stock. The company's 14-year streak of raising dividends demonstrates a commitment to shareholder returns, which is a positive sign for investors looking for stable income. This is complemented by a dividend growth of 19.57% over the last twelve months as of Q1 2023, showcasing the company's ability to increase shareholder value.
Moreover, Tractor Supply's stock exhibits low price volatility, which might appeal to investors seeking a stable investment, especially in the current market environment. This is backed up by a 29.12% increase in the stock's price over the last six months, indicating a strong performance in the market. Additionally, with a market capitalization of $27.35 billion and a robust return on assets of 12.53%, the company stands as a significant player in its sector with efficient asset utilization.
For investors interested in a deeper analysis, InvestingPro provides additional tips, such as the company's moderate level of debt and the fact that liquid assets exceed short-term obligations, which are critical factors in assessing the financial health of Tractor Supply. To explore these insights further and to discover more tips, readers can take advantage of the PRONEWS24 coupon code to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. There are 12 additional InvestingPro Tips available that could help investors make more informed decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.