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Tractor Supply Had A Robust FY 2014

William Bias profile picture
William Bias


  • New stores and increased spending at established stores contributed to robust fundamental expansion.
  • Tractor Supply’s balance sheet remains in decent shape.
  • Tractor Supply maintains a small but sustainable dividend.
  • Tractor Supply shows no sign of letting up.

On Jan. 28, "rural lifestyle retail store chain" Tractor Supply (NASDAQ: NASDAQ:TSCO) came out with its FY 2014 earnings announcement. The company had an excellent and robust FY 2014. Let's take a closer look.

Excellent revenue and profitability expansion

In 2014, Tractor Supply saw its revenue, net income and free cash flow increase 11%, 13% and 115% respectively. A good, balanced combination of increased sales at its established stores and the opening of new stores contributed to this robust expansion in its fundamentals. Tractor Supply's same store sales expanded 3.8% with transaction counts increasing 3.2% year-over-year. This means customers are coming back and spending more at its stores. This also gives indication that the company knows how to engage its customers.

Revenue expansion outpaced the growth in expenses serving as the catalyst behind its double digit net income increase. Tractor Supply's FY 2014 operating margins clocked in at 10.3% vs. 10% the same time last year. Its profit margin came in at 6.5% at the end of 2014 vs. 6.4% at the end of FY 2013.

Tractor Supply's explosion in free cash flow came from the net income increase and favorable changes in assets and liabilities, especially accounts payable and accruals. Moreover, the company eased up a little bit on its expansion in distribution infrastructure sending capital expenditures down 26% year-over-year.

Balance sheet okay

Tractor Supply possesses an okay balance sheet. However, its cash position is a little lighter than last year. Its $51 million in cash equates to a tiny 4% of stockholders' equity vs. 11% last year. I like to see companies with cash amounting to 20% or more of stockholders' equity. However, the company also possesses no long-term debt, which is impressive considering it increased store count by 106 locations during FY 2014.

Dividend is sustainable


This article was written by

William Bias profile picture
I have been analyzing stocks since 1992 and a freelance writer since 2012.

Analyst’s Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.

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Comments (2)

William Bias profile picture
Appreciate the readership stu_s!

stu_s profile picture
Thanks for the catch on cash William! $51 mm is extraordinarily low.
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