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Investors Like the More-Nimble Tractor Supply

More dynamic merchandising, a faster supply chain, and better customer read-through from opportunities with its loyalty program have driven solid sales and recent share price gains.

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Tractor Supply Co
(TSCO)

Although our outlook for narrow-moat

Our long-term outlook for the company is intact. Over the next five years, we expect average top-line growth of 7%, bolstered by the expansion of the brick-and-mortar footprint along with same-store sales of 3%. We don’t anticipate much in the way of operating margin expansion--to 10.2% by 2021, in line with the three-year historical average of 10.3%--as scale gains are offset by ongoing investments in the business, including the expansion and improvement of the distribution network. This ultimately leads to earnings per share growth that averages above 12% in our forecast.

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About the Author

Jaime M. Katz, CFA

Senior Equity Analyst
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Jaime M. Katz, CFA, is a senior equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. She covers home improvement retailers and travel and leisure.

Before joining Morningstar in 2011, Katz was an associate for Credit Agricole Corporate and Investment Bank. She also worked in equity research for William Blair for three years and spent three years in asset management at Mesirow Financial.

Katz holds a bachelor’s degree in economics from the University of Wisconsin and a master’s degree in business administration from the University of Chicago Booth School of Business. She also holds the Chartered Financial Analyst® designation. She ranked first in the leisure goods and services industry in The Wall Street Journal’s annual “Best on the Street” analysts survey in 2013, the last year the survey was conducted.

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