What happened
Tractor Supply (TSCO -1.02%) didn't report increased earnings year over year with its first-quarter results, and investors' knee-jerk reaction was to sell the stock. But after dropping as much as 5.2% Thursday morning, shares were lower by just 1.8% as of 11:30 a.m. ET.
So what
While diluted earnings of $1.65 per share were flat versus the year-ago period, Tractor Supply did increase total sales by more than 9%. Much of that was due to an increase in store count, however, helping to explain the stock's reaction. The company opened another 17 stores in the quarter, bringing its total count to more than 2,160. That compares to just over 2,000 one year ago.
Now what
Many investors -- and the company itself -- thought sales should have increased more based on that growth. But Tractor Supply said comparable-store sales (comps) were below expectations, "primarily due to less favorable spring weather trends."
The stock might have recovered some of its early drop thanks to management's confident guidance. Even after the slow start to the year, the company reiterated its full-year forecast of net income between $1.13 billion and $1.17 billion.
That's because Tractor Supply said it continues to gain market share. The company also believes its customers remain economically healthy as comps have grown in the last two months. CEO Hal Lawton said, "As spring has arrived across our markets, we are pleased with the improved sales trends we are seeing."
Shares of the rural lifestyle retailer have jumped more than 15% since January lows. A positive outlook from management helped soothe some investor fears after the initial report today. That helps explain the stock's recovery after this morning's early drop.
