Why Investors Are Eyeing Tractor Supply Co (TSCO): The Key Drive (2024)

3 days ago

Tractor Supply Co (TSCO, Financial) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $276.66, Tractor Supply Co has witnessed a daily loss of 0.44%, marked against a three-month change of 24.14%. A thorough analysis, underlined by the GF Score, suggests that Tractor Supply Co is well-positioned for substantial growth in the near future.

What Is the GF Score?

The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.

• Financial strength rank: 6/10
• Profitability rank: 10/10
• Growth rank: 10/10
• GF Value rank: 5/10
• Momentum rank: 10/10

Each one of these components is ranked and the ranks also have positive correlation with the long-term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With high ranks in profitability, growth, and momentum, and a slightly lower rank in financial strength and GF Value, GuruFocus assigned Tractor Supply Co the GF Score of 96 out of 100, which signals the highest outperformance potential.

Understanding Tractor Supply Co Business

Tractor Supply Co is the largest operator of retail farm and ranch stores in the United States. With a market cap of $29.86 billion and sales of $14.65 billion, the company has carved out a significant niche in its industry. Tractor Supply Co operates 2,216 of its namesake banners in 49 states, including 81 Orscheln Farm and Home stores (rebranded as Tractor Supply), along with 198 Petsense by Tractor Supply stores. The company's operating margin stands at 10.22%, reflecting its efficiency in managing operations. The revenue breakdown indicates a diversified income stream, with the majority coming from livestock and pet products, hardware, tools, and truck supplies, as well as seasonal gift and toy items.

Financial Strength Breakdown

Tractor Supply Co's Financial Strength rating indicates a solid balance sheet capable of withstanding economic fluctuations. The company's Interest Coverage ratio of 32.75 is particularly impressive, far exceeding Benjamin Graham's recommended threshold of 5. The Altman Z-Score of 5.53 further reinforces Tractor Supply Co's financial stability. Additionally, a Debt-to-Revenue ratio of 0.35 demonstrates the company's strategic and prudent approach to debt management.

Profitability Rank Breakdown

The Profitability Rank of Tractor Supply Co is a testament to its ability to generate profits effectively. The company's Operating Margin has shown a steady increase over the past five years, indicating an improving operational efficiency. Similarly, the Gross Margin has consistently risen, showcasing Tractor Supply Co's capacity to convert sales into profits. The company's Predictability Rank of 4.0 stars reflects its reliable performance and the trust it instills in investors.

Growth Rank Breakdown

Tractor Supply Co's high Growth Rank underscores its dedication to business expansion. The company's 3-Year Revenue Growth Rate of 13.6% surpasses 71.73% of its peers in the Retail - Cyclical industry. The significant growth in EBITDA over the past few years, with a three-year growth rate of 18.2 and a five-year rate of 21.4, highlights Tractor Supply Co's ongoing growth momentum.

Next Steps

Considering Tractor Supply Co's financial strength, profitability, and growth metrics, the GF Score highlights the firm's unparalleled position for potential outperformance. Investors seeking similar opportunities can explore more companies with strong GF Scores using the GF Score Screen. As Tractor Supply Co continues to demonstrate robust financial health and growth prospects, it remains a compelling choice for value investors looking to capitalize on market outperformance.

This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circ*mstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.