Tractor Supply Chugs Ahead

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To the best of my knowledge, Tractor Supply (Nasdaq: TSCO) has never really been closely examined on Foolish pages -- though it has been the subject of brief comments from Whitney Tilson and, more recently, the president and CEO of WD-40 (Nasdaq: WDFC). That had to change today, however, as the company's shares rose swiftly on heavy volume this morning, following the release of strong Q4 and full-year earnings.

Tractor Supply operates 463 "farm and ranch stores" targeting the lifestyle, maintenance, and business needs of rural residents and businessmen. A 9.6% Q4 same-store sales increase drove full-year sales ahead nearly 22%, to $1.47 billion. Decreased selling, general, and administrative expenses as a percent of sales, meanwhile, helped improve year-over-year operating margins. Net income for the year was up 50% to $56.5 million, including a $1.9 million accounting charge.

It's been a remarkable 12 months for Tractor Supply. Shares have skyrocketed over that period and handily beaten the S&P 500, as the company has turned in strong operating results and kept a crowded dance card of investing conferences.

Tractor Supply's outlook is promising, though tempered. It's pointing investors toward year-ahead revenue growth of between 13% and 15% and net income growth of about 20%. That's slower than 2003, certainly, but nevertheless respectable should the company begin producing steady cash flow.

There's reason for caution, with the company looking for growth to slow even as it continues expanding, but especially with it looking fairly valued at about 24 times projected earnings. However, if it continues to improve sales, generate operating leverage, and expand successfully (its improving same-store sales are encouraging here), there can still be room for it to run.

Take a look around the company on our Tractor Supply discussion board.

Dave Marino-Nachison can be reached here.