Critical Analysis: Tractor Supply (TSCO) versus Its Rivals

Tractor Supply (NASDAQ:TSCO) is one of 285 public companies in the “Specialty Retail” industry, but how does it compare to its peers? We will compare Tractor Supply to related businesses based on the strength of its dividends, risk, earnings, profitability, analyst recommendations, valuation and institutional ownership.

Dividends

Tractor Supply pays an annual dividend of $0.96 per share and has a dividend yield of 2.8%. Tractor Supply pays out 51.6% of its earnings in the form of a dividend. As a group, “Specialty Retail” companies pay a dividend yield of 2.1% and pay out 35.5% of their earnings in the form of a dividend. Tractor Supply has increased its dividend for 16 consecutive years.

Institutional and Insider Ownership

98.7% of Tractor Supply shares are owned by institutional investors. Comparatively, 51.6% of shares of all “Specialty Retail” companies are owned by institutional investors. 0.6% of Tractor Supply shares are owned by insiders. Comparatively, 20.5% of shares of all “Specialty Retail” companies are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Tractor Supply and its peers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tractor Supply	1	14	13	0	2.43
Tractor Supply Competitors	3661	15554	21587	585	2.46

Tractor Supply currently has a consensus target price of $38.62, indicating a potential upside of 13.78%. As a group, “Specialty Retail” companies have a potential upside of 8.97%. Given Tractor Supply’s higher possible upside, research analysts clearly believe Tractor Supply is more favorable than its peers.

Earnings & Valuation

This table compares Tractor Supply and its peers top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Tractor Supply	$15.52 billion	$1.10 billion	18.25
Tractor Supply Competitors	$7.05 billion	$386.47 million	31.96

Tractor Supply has higher revenue and earnings than its peers. Tractor Supply is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Volatility and Risk

Tractor Supply has a beta of 0.52, indicating that its stock price is 48% less volatile than the S&P 500. Comparatively, Tractor Supply’s peers have a beta of 1.66, indicating that their average stock price is 66% more volatile than the S&P 500.

Profitability

This table compares Tractor Supply and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tractor Supply	6.13%	40.05%	8.85%
Tractor Supply Competitors	-3.67%	-13.85%	3.19%

Summary

Tractor Supply beats its peers on 8 of the 15 factors compared.

About Tractor Supply

Tractor Supply Company operates as a rural lifestyle retailer in the United States. The company offers various merchandise, including livestock and equine feed and equipment, poultry, fencing, and sprayers and chemicals; food, treats, and equipment for dogs, cats, and other small animals, as well as dog wellness products; seasonal and recreation products comprising tractors and riders, lawn and garden, bird feeding, power equipment, and other recreational products; truck, tool, and hardware products, such as truck accessories, trailers, generators, lubricants, batteries, and hardware and tools; and clothing, gift, and décor products consist of clothing, footwear, toys, snacks, and decorative merchandise. It provides its products under the 4health, Paws & Claws, American Farmworks, Producer's Pride, Bit & Bridle, Red Shed, Blue Mountain, Redstone, C.E. Schmidt, Retriever, Country Lane, Ridgecut, Countyline, Royal Wing, Country Tuff, Strive, Dumor, Traveller, Farm Table, Treeline, Groundwork, TSC Tractor Supply Co, Huskee, Untamed, and JobSmart brand names. The company operates its retail stores under the Tractor Supply Company, Petsense by Tractor Supply, and Orscheln Farm and Home names; and operates websites under the TractorSupply.com and Petsense.com names. It sells its products to recreational farmers, ranchers, and others. Tractor Supply Company was founded in 1938 and is based in Brentwood, Tennessee.