Tractor Supply Company (NASDAQ: TSCO)
Tractor Supply Company is having a rough day in the market today, and for good reason. The company provided an update to guidance, leading to concerns. Today, we’ll talk about the update, what we saw from the stock as a result, and what we can expect to see from TSCO ahead. So, let’s get right to it…
TSCO Takes A Dive On Business Update
As mentioned above, Tractor Supply Company is having an incredibly hard day in the market today after providing a business update with regard to the third quarter. Unfortunately, it wasn’t the type of update that investors wanted to see.
In the update, we learned that net sales for the third quarter are expected to rise by between 4.2% and 5.0%. This puts third quarter revenue guidance at between $1.54 billion and $1.55 billion. While this figure is well ahead of the $1.48 billion we saw in the third quarter of 2015, the figure missed consensus estimates at $1.61 billion. In a release, TSCO blamed the following for the lower than expected guidance…
“While there are a number of economic headwinds impacting our consumer spending throughout many of the Company’s markets, the energy producing and agricultural markets are the most impacted. Based on the Company’s analysis of quarter-to-date results and trends, management currently believes the weaker than expected sales results have been heavily influenced by three main factors.”
The release went on to outline these three main factors as declines in comparable store sales and transaction count in energy producing regions, sales and transaction count declines in communities more dependent on the agricultural industry, and lower demand for pre-season heating related products.
What We Saw From The Stock
As investors, one of the first things that we learn is that the news moves the market. Any time positive news is released with regard to a publicly traded company, we can expect to see gains in the value of the stock associated with the news. Unfortunately however, the news released by TSCO was anything but positive. As a result, we’re seeing heavy declines on the stock today. Currently (1:19), the stock is trading at $69.41 per share after a loss of $14.12 per share or 16.90% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have a relatively mixed opinion of what we can expect to see from Tractor Supply Company. In the short run and likely medium run, the value of the stock is likely to continue to see heavy resistance. However, when we talk about TSCO, we’re not talking about a penny stock. Unfortunately, poor market conditions have weighed heavy on the company, and will likely continue to weigh heavy on the company throughout the year. However, I believe that they have the financial capability, expertise, and willingness needed in order to make it over this hurdle. With that said, it might be worthwhile to watch the stock closely for low points as buying opportunities. In the long run, I believe that this thing will climb!
What Do You Think?
Where do you think TSCO is headed moving forward and why? Join the discussion in the comments below!