Skip to main content

Tractor Supply Company(TSCO-Q)

Today's Change
Real-Time Last Update Last Sale Cboe BZX Real-Time

Disclaimer · the source of content originated from an external provide and placement with press releases may or may not have been paid-for. Use at your own risk.

Why Tractor Supply Stock Fell 11% This Week

Motley Fool - Fri May 20, 7:16AM CDT

What happened

Tractor Supply(NASDAQ: TSCO) shareholders lost ground to a falling market this week. The rural lifestyle retailer shed 11% through trading on Thursday compared to a 3% slump in the S&P 500, according to data provided by S&P Global Market Intelligence.

The decline was sparked by news from peers in the industry suggesting a weakening selling environment.

A child feeding chickens.

Image source: Getty Images.

So what

Walmart and Target each lowered their short-term earnings outlook this week, causing most retailers' stocks to fall in sympathy with these giants. Both companies said they are seeing strong customer traffic and sales trends overall.

However, shoppers appear to be shifting demand away from many niches that had been popular in earlier phases of the pandemic, like outdoor furnishings. Consumers are becoming more price conscious, too, as inflation jumps.

That shift could hurt Tractor Supply's business, which has benefited from unusually high demand for its rural lifestyle products. The main fear is that the company will follow its larger peers in reducing its 2022 earnings outlook at its next operating update.

Now what

There was no hint of that type of profit pressure in Tractor Supply's late April report, which covered the selling period that ended in late March. Yet its biggest seasonal period is the spring, as shoppers tend to spend more on pet and livestock supplies at that time.

If Tractor Supply sees a similar demand shift to Target's, executives might need to lower profit expectations. Target said operating margin will likely fall to around 6% of sales this year compared to prior expectations of around 8%. Tractor supply forecast an over 10% margin back in April, but the retailer could reduce that prediction in its next operating update in mid-July.

10 stocks we like better than Tractor Supply
When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Tractor Supply wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of April 27, 2022

Demitri Kalogeropoulos has no position in any of the stocks mentioned. The Motley Fool recommends Tractor Supply. The Motley Fool has a disclosure policy.