What happened

Shares of Tractor Supply (TSCO -0.02%) rose 13.1% in August, according to data from S&P Global Market Intelligence. The catalyst for the move appears to be a gradual appreciation of a good set of second-quarter earnings released at the end of July. 

Management pleased investors by raising its forecast for full-year comparable-store sales growth -- a key metric for retail companies -- to between 3%-3.5% from a previous range of 2%-3.5%. In addition, full-year diluted earnings per share is expected to be between $4.10-$4.20, up from a prior forecast of $3.95-$4.15.

Tractor Supply serves rural communities.

Image source: Tractor Supply.

The upgrade to full-year forecasts is built on a very good second quarter from which Tractor Supply managed to grow comparable-store sales by 5.6%, largely due to an impressive 3.7% rise in ticket prices. COO Steve Barbarick noted that the "strong average ticket growth of 3.7% was positively impacted by product mix, mainly from growth in our big-ticket items as well as slight commodity inflation."

Tractor Supply claims to be the "largest rural lifestyle retailer in the United States" and thus is largely dependent on spending from farmers and ranchers, and it's a good sign for the industry if its customers are willing to spend more on big-ticket items like mowers.

So what

The strength in Tractor Supply's big-ticket sales was somewhat replicated in Deere & Company's (DE 0.94%) third-quarter earnings released in the middle of August -- another possible catalyst for Tractor Supply's positive stock performance. In a nutshell, Deere is seeing good demand from the replacement equipment market and strong take-up of its advanced technological solutions.

It's another good sign of farmers' willingness to spend, and it comes despite Deere and others forecasting U.S. total farm cash receipts to be flat compared to 2017. Of course, if farmers are feeling positive enough about the future to buy Deere's equipment, it's likely that they will be buying supplies from a retailer like Tractor Supply.

Now what

The company is coming up against some difficult compares in the second half -- largely due to strong demand in the third quarter of last year caused by hurricane damage. As a result, comparable-store sales growth is expected to slow from the 4.7% rate in the first half -- recall that the full-year forecast is for growth of 3%-3.5%. It's something for investors to look out for in future quarters.

However, it's far harder to anticipate what the likely impact of tariffs will be on the farm incomes and the community at large. Moreover, weather and farming commodity price movements can also have an impact -- both are hard-to-predict variables.