Appearance of Tractor Supply Co stock
Tractor Supply Co’s stock (NAS: TSCO, 30-year financials) is estimated to be slightly overvalued, according to the GuruFocus value calculation. The GuruFocus Value is GuruFocus’s estimate of the fair value at which the stock is to trade. It is calculated based on the historical multiples at which the stock has traded, the company’s past growth, and analysts’ estimates of the company’s future performance. If a share’s price is significantly above the GF value line, it is overvalued and its future performance may be poor. On the other hand, if it is significantly below the GF value line, its future return is likely to be higher. At its current price of $ 180.94 per share and market cap of $ 20.9 billion, Tractor Supply Co stock is showing all signs of modest overvaluation. The GF value for Tractor Supply Co is shown in the table below.
Given that Tractor Supply Co is relatively overvalued, its long-term stock return is likely to be lower than its business growth, which has averaged 16.9% over the past three years and is expected to grow by 4. 55% per year over the next three to five years. .
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It is always important to check the financial strength of a company before buying its shares. Investing in companies with low financial strength presents a higher risk of permanent loss. Looking at the cash-to-debt ratio and interest coverage is a great way to understand the financial strength of a business. Tractor Supply Co has a cash to debt ratio of 0.31, which is within the average for companies in the retail industry – cyclical. The overall financial strength of Tractor Supply Co is 5 out of 10, which indicates that the financial strength of Tractor Supply Co is fair. Here is Tractor Supply Co’s debt and cash flow for the past several years:
Companies that have historically been profitable over the long term pose less risk to investors who want to buy stocks. Higher profit margins usually dictate a better investment compared to a business with lower profit margins. Tractor Supply Co has been profitable 10 in the past 10 years. In the past twelve months, the company achieved sales of $ 11.5 billion and earnings of $ 7.22 per share. His the operating margin is 10.34%, which ranks better than 81% of companies in the Retail – Cyclical industry. Overall, Tractor Supply Co’s profitability is ranked 9 out of 10, indicating strong profitability. Here is Tractor Supply Co’s sales and net income for the past few years:
One of the most important factors in the valuation of a business is growth. Long-term equity performance is closely linked to growth, according to GuruFocus research. Companies that grow faster create more shareholder value, especially if that growth is profitable. Tractor Supply Co’s average annual revenue growth is 16.9%, which ranks better than 88% of companies in the Retail – Cyclical industry. The 3-year average EBITDA growth is 15.9%, which ranks better than 66% of companies in the retail industry – cyclical.
Another way to look at the profitability of a business is to compare its return on invested capital and the weighted cost of capital. Return on invested capital (ROIC) The extent to which a business generates cash flow relative to the capital it has invested in its business. The weighted average cost of capital (WACC) is the rate that a company should pay on average to all of its security holders to finance its assets. We want to have a return on invested capital greater than the weighted cost of capital. In the past 12 months, Tractor Supply Co’s Return on Investment is 20.82 and its cost of capital is 6.01. Tractor Supply Co’s historical ROIC vs WACC comparison is shown below:
In summary, Tractor Supply Co’s stock (NAS: TSCO, 30-year financials) is seen as slightly overvalued. The company’s financial position is fair and its profitability is solid. Its growth ranks better than 66% of companies in the Retail – Cyclical industry. To learn more about Tractor Supply Co’s stock, you can view their 30-year financial data here.
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