StockStory Favors Ross Stores Over Tilly’s and Tractor Supply

StockStory author Anthony Lee singled out Ross Stores as the strongest of three consumer retailers, citing sales growth and returns on capital. The article raised concerns about Tilly’s and Tractor Supply.

Lee said Ross had benefited from new store openings and solid same-store sales. Stores open at least a year averaged 6.1% sales growth over the past two years, while the company’s return on capital was 30.6%, according to the article.

For Tilly’s, the article pointed to ongoing operating margin losses and a shrinking store count. It said the retailer’s stock price of $4.52 implied a forward price-to-earnings ratio of 35.6.

Lee also cited Tractor Supply’s average annual revenue growth of 2.2% over the past three years and weak same-store sales trends over the past two years. The article said its free cash flow margin fell by 3.5 percentage points over the past year.

The article noted that retailers face pressure as e-commerce takes share from brick-and-mortar stores. It said the industry gained 1.6% over six months, trailing the S&P 500 by 14.7 percentage points.