Results: Tractor Supply Company Exceeded Expectations And The Consensus Has Updated Its Estimates

Investors in Tractor Supply Company (NASDAQ:TSCO) had a good week, as its shares rose 8.4% to close at US$274 following the release of its first-quarter results. The result was positive overall - although revenues of US$3.4b were in line with what the analysts predicted, Tractor Supply surprised by delivering a statutory profit of US$1.83 per share, modestly greater than expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

See our latest analysis for Tractor Supply

Taking into account the latest results, the most recent consensus for Tractor Supply from 30 analysts is for revenues of US$15.0b in 2024. If met, it would imply a reasonable 2.3% increase on its revenue over the past 12 months. Statutory per share are forecast to be US$10.36, approximately in line with the last 12 months. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$15.0b and earnings per share (EPS) of US$10.24 in 2024. So it's pretty clear that, although the analysts have updated their estimates, there's been no major change in expectations for the business following the latest results.

The consensus price target rose 6.4% to US$262despite there being no meaningful change to earnings estimates. It could be that the analystsare reflecting the predictability of Tractor Supply's earnings by assigning a price premium. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Tractor Supply at US$300 per share, while the most bearish prices it at US$205. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that Tractor Supply's revenue growth is expected to slow, with the forecast 3.1% annualised growth rate until the end of 2024 being well below the historical 14% p.a. growth over the last five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 4.9% annually. Factoring in the forecast slowdown in growth, it seems obvious that Tractor Supply is also expected to grow slower than other industry participants.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Tractor Supply's revenue is expected to perform worse than the wider industry. We note an upgrade to the price target, suggesting that the analysts believes the intrinsic value of the business is likely to improve over time.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Tractor Supply going out to 2026, and you can see them free on our platform here..

However, before you get too enthused, we've discovered 2 warning signs for Tractor Supply that you should be aware of.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.