Two months ago Tractor Supply announced lower guidance for the third quarter and full year and the stock fell. In the interim the company has only met, and not exceeded, this lowered guidance. More recently analysts have reacted with a series of downgrades pushing the stock even lower. Today the stock price sits at just two-thirds the value it had just four months ago.
I believe Tractor Supply is a well run company and is facing a tough economic climate. But management is smart and economic conditions often change over time. And while it may take a few quarters for this to work itself out, it's also providing a very nice opportunity to add to my position in Tractor Supply at (relatively) bargain basement prices.
I believe Tractor Supply is a well run company and is facing a tough economic climate. But management is smart and economic conditions often change over time. And while it may take a few quarters for this to work itself out, it's also providing a very nice opportunity to add to my position in Tractor Supply at (relatively) bargain basement prices.
Tractor Supply Company operates rural lifestyle retail stores in the United States. It 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. As of December 26, 2015, the company operated 1,488 stores in 49 states. It operates its retail stores under the Tractor Supply Company, Del's Feed & Farm Supply, and HomeTown Pet names. The company also operates an e-commerce Website at TractorSupply.com. It sells its products to recreational farmers, ranchers, and others, as well as tradesmen and small businesses. Tractor Supply Company was founded in 1938 and is based in Brentwood, Tennessee.
(Summary) (Company) (Chart)
| 20 September 2016 Price $67.58 1yr Target $88.87 Analysts 23 Dividend $0.96 Payout Ratio 30.67% 1yr Cap Gain 31.50% Yield 1.42% 1yr Tot Return 32.92% P/E 21.60 PEG 1.53 Beta 1.23 | EPS (ttm) $3.13 EPS next yr $3.65 Forward P/E 18.54 EPS next 5yr 14.10% 1yr Price Support $51.46 Market Cap $9.15 Bil Revenues $6.44 Bil Earnings $423.10 Mil Profit Margin 6.56% Quick Ratio 0.30 Current Ratio 2.20 Debt/Equity 0.15 | 1yr RevGR 9.01% 3yr RevGR 10.00% 5yr RevGR 11.34% 1yr EarnGR 12.78% 3yr EarnGR 16.26% 5yr EarnGR 21.67% 1yr DivGR 25.00% 3yr DivGR 25.70% 5yr DivGR 41.70% ROA 17.00% ROE 30.30% |
My Perspective
I own a few shares of Tractor Supply because I like the company and I have a lot of confidence in management based upon years of increasing revenues, earnings and dividends. I don't think that's going to change in the future. Now we can discuss the rate of increases and how that's affected by the overall economy, but in the end I think the fundamental will continue to improve in the years ahead. I believe any pullback in the price is an opportunity to load up on the shares while they're on sale. And that's exactly what I plan to do. I believe any slowing of growth rates will be only temporary and that buying shares at this level will make me look like an intelligent investor a year from now.
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