Transcript TSCO - State University of New York at Geneseo

TSCO
What do they do?
 Retail farm and ranch stores throughout the
United States
 A vast array of products that allow Tractor
Supply to be a “one stop shop”
 Product groups are broken down into the
following categories: livestock and pet,
hardware tools and trucks, seasonal gift and toy
products, clothing and footwear, and agriculture
Breakdown of Revenue
In order from greatest to least, Livestock, Hardware, Seasonal, Clothing, Agriculture
Selected Financial Data
Selected Financial Data
Selected Financial Data
Growth Strategy and
Important Metrics
 Investing activities have increased from $74 in 2009 to $166.2
in 2011 (in millions)
 Attributed to the addition of 85 new stores in 2011, the
construction of a new distribution center in KY, and the
purchase of 12 of their previously leased stores in 2011
 The company leases 93% of their stores, of their total 1,085
stores in 44 states as of Dec 31, 2011
 “We have developed a proven method for selecting store
sites and have identified over 1,000 additional markets for
new Tractor Supply stores.”
Growth Strategy and
Important Metrics Cont.
 Strong same store sales growth.
 Long term goal to have private label brands account for
25% of sales, boosting margins and bottom line growth.
 Realistic stock buy back program
 “We believe that Tractor Supply has successfully tweaked
merchandise assortment across its stores, which is in line
with the prolonged economic downturn. The company has
increased the proportion of less discretionary items, such
as animal and pet-related products, while reducing shelf
space for certain big-ticket merchandise, such as outdoor
power equipment.” – Zacks Equity Research
“Intangibles”
 An established and trusted brand
 Members of the community, not just
another store
 Operate in a niche market with no direct
competitors
Recommendation
 Step into the position with half of our intended holding
 The company has a high P/E of 26 and could fall given a
miss in earnings or a negative short term headline
 Purchasing the other half if P/E drops to 21-22