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 $57.14, Tractor Supply Co has witnessed a daily gain of 0.26%, marked against a three-month change of 3.52%. 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: 9/10
- Growth rank: 10/10
- GF Value rank: 6/10
- Momentum rank: 8/10
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 a high GF Score of 94 out of 100, Tractor Supply Co 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. The company targets recreational farmers and ranchers and has little exposure to commercial and industrial farm operations. At the end of fiscal 2024, the company operated 2,296 of its namesake banners in 49 states, along with 206 Petsense by Tractor Supply stores. Stores are generally concentrated in rural communities, as opposed to urban and suburban areas. In fiscal 2023 (most recent data available), revenue consisted primarily of livestock, equine & agriculture (27%), companion animal (25%), and seasonal & recreation (22%).
Financial Strength Breakdown
According to the Financial Strength rating, Tractor Supply Co's robust balance sheet exhibits resilience against financial volatility, reflecting prudent management of capital structure. The Interest Coverage ratio for Tractor Supply Co stands impressively at 26.88, underscoring its strong capability to cover its interest obligations. This robust financial position resonates with the wisdom of legendary investor Benjamin Graham, who favored companies with an interest coverage ratio of at least 5.
With an Altman Z-Score of 5.55, Tractor Supply Co exhibits a strong defense against financial distress, highlighting its robust financial stability. With a favorable Debt-to-Revenue ratio of 0.36, Tractor Supply Co's strategic handling of debt solidifies its financial health.
Profitability Rank Breakdown
The Profitability Rank shows Tractor Supply Co's impressive standing among its peers in generating profit. Furthermore, Tractor Supply Co's Gross Margin has seen a consistent rise over the past five years, as evidenced by the data: 2020: 35.42; 2021: 35.17; 2022: 35; 2023: 35.92; 2024: 36.26. This trend underscores the company's growing proficiency in transforming revenue into profit.
Tractor Supply Co's strong Predictability Rank of 4.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, Tractor Supply Co demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 7.9%, which outperforms better than 55.5% of 1,054 companies in the Retail - Cyclical industry.
Moreover, Tractor Supply Co has seen a robust increase in its earnings before interest, taxes, depreciation, and amortization (EBITDA) over the past few years. Specifically, the three-year growth rate stands at 9.2, and the rate over the past five years is 17.9. This trend accentuates the company's continued capability to drive growth.
Conclusion
Tractor Supply Co's financial strength, profitability, and growth metrics, as highlighted by the GF Score, underscore the firm's unparalleled position for potential outperformance. With a strong balance sheet, impressive profitability, and robust growth prospects, Tractor Supply Co is well-equipped to continue its trajectory of success. For investors seeking companies with strong GF Scores, GuruFocus Premium members can explore more opportunities using the following screener link: GF Score Screen.
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 circumstances. 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.
