(22 September 2016)
- Last Traded Price: $68.34
- 52-week High: $97.25
- 52-week Low: $66.77
- P/E: 21.72
- Return on Equity: 30.30%
- Dividend Yield: 0.89%
- Debt to Capital Ratio: 10.7%
- Current Ratio: 2.19:1
Balance Sheet & Cash Flow Overview
($ 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.
- 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. 7th 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.