2015-04-17 Is Tractor Supply A Buy Ahead Of Earnings? (TSCO)
Is Tractor Supply A Buy Ahead Of Earnings? (TSCO)
Notes: The $12B operator of retail farm and ranch stores has more than 1,380 stores located throughout the United States. Tractor Supply trades at a P/E ratio of 28.26x (2015 estimates), price to sales ratio of 2.06x, and a price to book ratio of 9.11x. Earnings are projected to increase 15% annually and sales are projected to rise 10% annually over the next couple of years. About 44% of revenues in 2014 came from their livestock and pet categories. When you put a PEG ratio of 2x on the stock it puts the price at $92, which is probably conservative since the company has beat EPS estimates by $0.05 each in the last two quarters. On February 25th, Barclays raised their price target to $110 from $92 (overweight rating). Q1 earnings are due out on April 22nd (shares have moved higher after earnings on three consecutive reports).
Tractor Supply (TSCO) Options Trade Ideas
Buy the (TSCO) May $80/$90 bull risk reversal for a $0.75 debit or better
(Buy the May $90 call and sell the May $80 put, all in one trade)
Stop loss- A move below $80 in the stock
1st upside target- $1.50
2nd upside target- $3.00
Buy the (TSCO) May $90 call for $1.75 or better
Stop loss- None
1st upside target- $3.50
2nd upside target- $5.00
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