Tractor Supply Company (TSCO)

(22 September 2016)

Balance Sheet & Cash Flow Overview

($ in Thousands)

(Dates for Fiscal 6 Months Ended June 27 ’15 – June 25 ‘16)

Total Assets increased $307,496.
Currents Liabilities decreased $21,166.
Net Sales increased $216,079.
Gross Profit increased $73,741.
Operating Income increased $19,432.
Net Income rose $12,722.
Net Cash from Operating Activities increased $34,501.
Used $4,203 more in ’16 for Investing Activities.
Cash and Cash Equivalents at End of Period increased $94,795.
Livestock and Pet made up 46% of Retail Sales, up 2% from ’15.
- Seasonal, Gift and Toy Products – 20%
- Hardware, Tools and Truck – 5%
- Clothing and Footwear – 7%
TSCO Opened 22 stores for Fiscal Three Months ended June 25 ’16 compared to 17 openings June 27 ’15.
- In total, Store Count increased by 104 at end of period.
Working Capital increased $198.2.

Company Notes

Largest consumer farm specialty retailer in the U.S., giving it ample advantage within its competitive market, with more than $6 Billion in annual sales.
Store base has grown by 50% over the past 5 years.
Forecast that TSCO will grow to nearly 2,400 stores over the next decade, starting with big box centers in the western half of US.
Biggest competitors are PetSmart and Home Depot.
- That being said, TSCO focuses on active, DIY consumers, in which many of those products are higher-end, higher cost.
Currently working on customer attribution data (loyalty program).
Energy markets and the slowing agriculture industry are main causes for stock decline.
After opening Arizona distribution center in 2015, TSCO should be able to leverage their distribution expenses, which in turn leads to accelerated EBIT expansion.
Fell from Sept. 7^th high of $83.53 down to $67.58 on 9/20.
- This is due to Comp Sales woes and sell-side downgrades as their guidance disappoints.
- However, TSCO faces ‘Near-Term Questions’
As a long – term, value play, TSCO would be considered a “steal” at these levels.
Applying Discounted Cash Flow models, TSCO Fair Value is around $88.82.
Negative Near – Term outlooks could be a chance at long term value and profit.

Opinion on Where it’s Headed

I am bullish on TSCO. Short term downtrends and growth sales present a great company at a really good price. Using a discounted cash flow model, TSCO has an intrinsic value of $89. Given it’s impressive balance sheets, sustainable cash flows, and position within it’s industry, I am bullish on the trend of this company.

Published by The Market Plunger