Tractor Supply Company (NASDAQ:TSCO)
Tractor Supply Company (TSCO), a retail store company, yesterday reported their second quarter 2016 financial results. Tractor reported second quarter earnings to be in between $1.15 and $1.16 per share, which fell short of analyst expectations of $1.26 per share. Tractor reported second quarter net sales increased 4.5% year over year to $1.85 billion, which fell short of analyst expectations of $1.932 billion.
Tractor Supply Company CEO’s Comments
Greg Sandfort, Chief Executive Officer, stated, “As our preliminary results show, we had a challenging second quarter. While our traffic trends remained positive and the sale of core pet and animal offerings remained strong, we did experience weakness in many of our seasonal and big ticket categories. We tend to look at the business by the half, and following a strong first quarter with an early start to the sale of seasonal merchandise driven by favorable March weather and an early Easter, we saw a reversal in trends with the cooler temperatures throughout much of the country in April and May. As the weather patterns normalized in early June, so did our sales trends, but it was not enough to offset the weakness earlier in the quarter. Traffic trends in the second quarter remained healthy, and our team members in the field, distribution centers and store support center continued to meet our customers’ everyday basic needs.”
Mr. Sandfort continued, “Despite an improved sales trend in June, we do not anticipate a significant shift in seasonal sales into the third quarter. Although we have not experienced a significant change in our customers’ use of credit or a shift in spending to lower cost products which normally would suggest a fundamental change in their purchase behaviors, the lower than expected sales in the second quarter leads us to a more cautious outlook for the business in fiscal 2016.”
TSCO Technical Analysis
TSCO opened trading yesterday at $94.56, which was up from the previous day's trading of $94.17. TSCO closed trading yesterday at $95.17 and crashed down after market to $88.35, equivalent to a 7% decrease from the closing price.
Taking a look at the daily chart we can see the last time TSCO traded below these levels was on April 11th, when it traded at $86.98. Taking a closer look at the daily chart we can see that TSCO has been on an overall upward trend dating back to February 8th, when it traded at $79.82. TSCO has a float of 132.83 million shares and traded below the normal daily trading volume on Wednesday.
For trading purposes, I would like to see TSCO open trading on Thursday below $90.60, and if it does I would be looking to take a short position at the bell. My stop loss would be $0.50 from my entry position, fearing anything more than that and the stock would start to fill in the gap down.
Company Profile
Tractor Supply Company operates rural lifestyle retail stores in the United States. It offers a selection of merchandise, including equine, livestock, pet, and small animal products necessary for their health, care, growth, and containment; hardware, truck, towing, and tool products; seasonal products, such as heating products, lawn and garden items, power equipment, gifts, and toys; work/recreational clothing and footwear; and maintenance products for agricultural and rural use. As of December 26, 2015, the company operated 1,488 stores in 49 states.
It operates its retail stores under the Tractor Supply Company, Del’s Feed & Farm Supply, and HomeTown Pet names. The company also operates an e-commerce Website at TractorSupply.com. It sells its products to recreational farmers, ranchers, and others, as well as tradesmen and small businesses. Tractor Supply Company was founded in 1938 and is based in Brentwood, Tennessee.