Tractor Supply (TSCO) AI Stock Analysis

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Tractor Supply

(NASDAQ:TSCO)

75Outperform

Tractor Supply's strong financial performance, positive technical indicators, and strategic growth plans contribute positively to its stock score. However, the moderately high P/E ratio and challenges such as modest sales growth and deflation impacts temper the overall outlook. The company is well-positioned in the Specialty Retail industry with a solid foundation but needs to manage leverage carefully.

Positive Factors

Customer Growth

The 'Chick Days' promotions have consistently attracted new customers, leading to increased sales of live birds.

Market Position

Tractor Supply Company is a best-in-class, well positioned retailer in terms of market served, competitive advantages and long-term earnings potential.

Negative Factors

Supply Disruptions

Millions of chickens have been impacted by the avian flu, leading to supply disruptions that could affect availability for Tractor Supply's 'Chick Days' promotions.

Valuation Concerns

Current valuation versus near-term profit growth prospects makes for a tricky set-up.

Tractor Supply (TSCO) vs. S&P 500 (SPY)

Market Cap

$27.28B

Dividend Yield1.73%

Average Volume (3M)5.42M

Price to Earnings (P/E)25.1

Beta (1Y)0.64

Revenue Growth2.25%

EPS Growth1.00%

CountryUS

Employees26,000

SectorConsumer Cyclical

Sector Strength62

IndustrySpecialty Retail

Share Statistics

EPS (TTM)2.04

Shares Outstanding531,615,400

10 Day Avg. Volume6,572,442

30 Day Avg. Volume5,416,293

Financial Highlights & Ratios

PEG Ratio25.27

Price to Book (P/B)N/A

Price to Sales (P/S)1.87

Price to Cash Flow (P/CF)13.50

P/FCF Ratio13.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$56.24

Price Target Upside8.84% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering20

Tractor Supply Business Overview & Revenue Model

Company DescriptionTractor Supply Company operates as a rural lifestyle retailer in the United States. The company offers a selection of merchandise, including equine, livestock, pet, and small animal products necessary for their health, care, growth, and containment; hardware, truck, towing, and tool products; seasonal products, such as heating products, lawn and garden items, power equipment, gifts, and toys; work/recreational clothing and footwear; and maintenance products for agricultural and rural use. It provides its products under the 4health, Producer's Pride, American Farmworks, Red Shed, Bit & Bridle, Redstone, Blue Mountain, Retriever, C.E. Schmidt, Ridgecut, Countyline, Royal Wing, Dumor, Strive, Groundwork, Traveller, Huskee, Treeline, JobSmart, TSC Tractor Supply Co, Paws & Claws, and Untamed brands. As of June 25, 2022, it operated 2,016 Tractor Supply stores in 49 states; and 178 Petsense stores in 23 states. The company operates its retail stores under the Tractor Supply Company, Del's Feed & Farm Supply, and Petsense names; and operates websites under the TractorSupply.com and Petsense.com names. It sells its products to recreational farmers, ranchers, and others. The company was founded in 1938 and is based in Brentwood, Tennessee.

How the Company Makes MoneyTractor Supply Company generates revenue primarily through the sale of its diverse product offerings in its retail stores and through its e-commerce platform. The company benefits from a broad customer base that includes hobby farmers, livestock and pet owners, and rural homeowners, leading to consistent demand for its products. Key revenue streams include sales of livestock and pet products, hardware and tools, clothing and footwear, and seasonal outdoor items. In addition to product sales, Tractor Supply also leverages its Neighbor's Club loyalty program to enhance customer engagement and drive repeat purchases. Strategic partnerships with vendors and a focus on private label brands help Tractor Supply optimize its product assortment and margins, further contributing to its profitability.

Tractor Supply Financial Statement Overview

Summary

Tractor Supply showcases strong financial performance with consistent revenue and profit growth, effective cost management, and operational efficiency. The balance sheet is solid, though rising leverage is a concern. Robust cash flows indicate good liquidity and financial flexibility.

Income Statement

Very Positive

Tractor Supply has demonstrated consistent revenue growth over the past years, with a notable increase from $8.35 billion in 2019 to $14.88 billion in 2024. The gross profit margin remains strong, consistently above 35%, indicating effective cost management. The EBIT and EBITDA margins are stable, reflecting operational efficiency. However, the net profit margin has shown slight volatility, primarily due to increased operating expenses and financing costs.

Balance Sheet

Positive

The company's balance sheet shows a healthy equity base with a consistent increase in stockholders' equity from $1.57 billion in 2019 to $2.27 billion in 2024. The debt-to-equity ratio has increased over the years, indicating higher leverage, which could pose risks if interest rates rise. The equity ratio remains stable, showing the company's ability to cover its liabilities. Overall, the balance sheet is robust but with caution due to rising debt levels.

Cash Flow

Positive

Tractor Supply's cash flow from operations has grown steadily, supporting its capital expenditures and resulting in positive free cash flow. The operating cash flow to net income ratio is strong, indicating efficient cash generation relative to profits. The free cash flow to net income ratio shows that the company maintains good liquidity. However, there are fluctuations in financing cash flow due to varying debt issuance and repayment activities.

Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Breakdown
Income Statement		Total Revenue
14.88B	14.56B	14.20B	12.73B	10.62B
	Gross Profit
5.40B	5.23B	4.97B	4.48B	3.76B
	EBIT
1.47B	1.48B	1.43B	1.31B	996.93M
	EBITDA
1.91B	1.87B	1.78B	1.58B	1.21B
	Net Income Common Stockholders
1.10B	1.11B	1.09B	997.11M	748.96M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
251.49M	397.07M	202.50M	878.03M	1.34B
	Total Assets
9.81B	9.19B	8.49B	7.77B	7.05B
	Total Debt
5.42B	5.04B	4.27B	3.92B	3.54B
	Net Debt
5.17B	4.64B	4.07B	3.04B	2.20B
	Total Liabilities
7.54B	7.04B	6.45B	5.76B	5.13B
	Stockholders Equity
2.27B	2.15B	2.04B	2.00B	1.92B
Cash Flow		Free Cash Flow
636.79M	580.15M	583.61M	510.29M	1.10B
	Operating Cash Flow
1.42B	1.33B	1.36B	1.14B	1.39B
	Investing Cash Flow
-643.92M	-653.07M	-1.09B	-627.34M	-292.21M
	Financing Cash Flow
-922.50M	-486.39M	-938.78M	-975.11M	155.21M

Tractor Supply Technical Analysis

Technical Analysis Sentiment

Negative

Last Price51.67

Price Trends

50DMA

54.12

Negative

100DMA

54.59

Negative

200DMA

54.52

Negative

Market Momentum

MACD

-0.16

Negative

RSI

55.09

Neutral

STOCH

83.83

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSCO, the sentiment is Negative. The current price of 51.67 is below the 20-day moving average (MA) of 52.82, below the 50-day MA of 54.12, and below the 200-day MA of 54.52, indicating a bearish trend. The MACD of -0.16 indicates Negative momentum. The RSI at 55.09 is Neutral, neither overbought nor oversold. The STOCH value of 83.83 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for TSCO.

Tractor Supply Risk Analysis

Tractor Supply disclosed 35 risk factors in its most recent earnings report. Tractor Supply reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Tractor Supply Peers Comparison

Overall Rating

UnderperformOutperform

Sector (59)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TSCO	75 Outperform	$27.28B	25.15	49.83%	1.73%	2.25%	1.00%
TSN	75 Outperform	$20.87B	19.77	5.74%	3.31%	1.27%	―
DE	74 Outperform	$122.84B	20.06	27.91%	1.39%	-20.93%	-34.33%
LNN	74 Outperform	$1.34B	17.58	15.38%	1.16%	0.46%	12.22%
Sector *	59 Neutral	$11.40B	10.19	-0.83%	4.03%	1.27%	-16.17%
AGCO	52 Neutral	$6.40B	46.40	-10.11%	1.35%	-19.08%	-136.41%
FARM	48 Neutral	$38.65M	―	-23.75%	―	-9.51%	83.29%

* Consumer Cyclical Sector Average

Performance Comparison

TSCO

Tractor Supply

51.67

3.47

7.20%

AGCO

Agco

86.23

-29.69

-25.61%

Deere

459.13

67.67

17.29%

FARM

Farmer Brothers Company

1.75

-1.60

-47.76%

LNN

Lindsay

126.78

13.57

11.99%

TSN

Tyson Foods

60.54

4.59

8.20%

Tractor Supply Earnings Call Summary

Earnings Call Date: Jan 30, 2025 | % Change Since: -9.24% | Next Earnings Date: Apr 24, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a balanced sentiment with significant achievements in financial performance, customer engagement, and strategic investments. However, these are tempered by challenges such as modest sales growth, deflation impacts, and operating margin pressures.

Highlights

Record Financial Performance

For the fiscal year 2024, Tractor Supply achieved record financial results with net sales of nearly $14.9 billion, growing 2.2% versus 2023. Diluted earnings per share were a record $2.04 on a split-adjusted basis.

Digital Sales Milestone

Tractor Supply's digital business reached another year of record sales, topping over $1.1 billion.

Strong Customer Engagement

Customer metrics hit all-time highs with record low frontline team member attrition, record high total active customer accounts, and high-value customer retention. Neighbor's Club membership exceeded 38 million, representing 80% of sales.

Expansion and Investment

In 2024, Tractor Supply opened 80 new Tractor Supply stores and 11 Petsense stores, funded by a record $1.4 billion in operating cash flow. Additionally, the company acquired Allivet, expanding its market reach.

Positive Outlook for 2025

Tractor Supply is forecasting strong net sales growth of 5% to 7% and comp sales performance of 1% to 3% for 2025, expecting moderation of headwinds and continued market share gains.

Lowlights

Modest Sales Growth

In the fourth quarter, net sales grew only 3.1% with comparable store sales increasing by 0.6%, indicating a challenging retail environment.

Impact of Deflation

Deflation had an estimated 100 basis point drag on comp sales performance in the fourth quarter, affecting commodity-based product categories.

Operating Margin Decline

Fourth quarter operating margin declined 69 basis points to 8.4% due to growth investments, higher depreciation, and modest deleverage of fixed costs.

Headwinds from Weather and Deflation

The warm weather in November and December negatively impacted winter seasonal business, and deflation pressure continued to affect sales in key product categories.

Company Guidance

In the recent Tractor Supply Company call, the company provided a comprehensive outlook for 2025, highlighting several key metrics and strategic initiatives. The company anticipates a strong net sales growth of 5% to 7%, with comparable store sales expected to increase between 1% and 3%. For the fiscal year 2024, Tractor Supply reported net sales of nearly $14.9 billion, marking a 2.2% growth compared to 2023, with a comparable store sales increase of 0.2%. The company achieved a record operating cash flow of $1.4 billion and returned over $1 billion to shareholders for the fourth consecutive year. The digital business also reached a new high, surpassing $1.1 billion in sales. Looking forward, Tractor Supply plans to open approximately 90 new stores and 10 Petsense stores in 2025, supported by strategic investments, including a new distribution center in Idaho. The company is also integrating Allivet, a recent acquisition expected to add over $100 million in net sales, into its Neighbor's Club, which now boasts over 38 million members.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.