Telsey maintains Outperform on Tractor Supply, $67 target

On Thursday, Telsey Advisory Group sustained a positive stance on Tractor Supply Company (NASDAQ:TSCO) shares, reiterating an Outperform rating alongside a $67.00 price target. Currently trading at $49.36, near its 52-week low of $46.97, the stock has attracted varied analyst opinions, with targets ranging from $46 to $67. The firm’s analyst expressed confidence in the company’s potential for continued market share growth and dominance in its niche market, particularly in rural America. According to InvestingPro data, the company maintains strong financials with a GOOD overall health score and has demonstrated consistent profitability. This optimism is anchored in Tractor Supply’s strategic "Life Out Here 2030" plan, which is anticipated to foster long-term comparable store sales growth of 3%-5% and earnings per share (EPS) growth of 8%-11%. The company, with its current market capitalization of $26.24 billion and annual revenue of $14.88 billion, has demonstrated steady growth with a 5-year revenue CAGR of 12%.

Tractor Supply’s strategic initiatives are diverse and growth-focused. The company plans to accelerate its store openings, with 90 new locations in 2025 and 100 each year thereafter until 2030, aiming for a long-term goal of approximately 3,200 stores. Additionally, Project Fusion store remodels are currently in place in about half of the existing 2,296 stores, with the goal of extending these remodels across the entire chain by 2030.

The company’s growth strategy also includes the expansion of garden centers, with expectations to establish them in roughly 1,000 stores by 2030. Another key initiative is to increase the focus on pet products, a segment that has shown robust growth in the retail sector. With a solid gross profit margin of 36.26% and strong dividend performance - having raised dividends for 15 consecutive years - Tractor Supply demonstrates financial resilience. For deeper insights into TSCO’s financial health and growth potential, InvestingPro subscribers can access comprehensive analysis and additional ProTips. Tractor Supply is also aiming to grow its Neighbor’s Club loyalty program to approximately 55 million members by 2030, up from around 38 million in 2024.

Moreover, Tractor Supply is looking to expand its retail media business and increase the penetration of its private brands to about 33% in 2030, up from the current 29%. Enhancing final mile delivery capabilities and building out the direct sales business are also integral parts of the company’s long-term strategy.

The $67 price target set by Telsey is based on applying a price-to-earnings (P/E) multiple of around 30 times to the firm’s 2025 EPS estimate of $2.20 for Tractor Supply. Currently trading at a P/E ratio of 24.15x, the stock’s valuation aligns with InvestingPro’s Fair Value assessment. Investors can access detailed valuation metrics, including comprehensive Pro Research Reports covering 1,400+ top stocks, through the InvestingPro platform. This valuation reflects the analyst’s expectation of the company’s continued growth and profitability through the implementation of its strategic initiatives.

In other recent news, Tractor Supply Company reported its fourth-quarter earnings for 2024, revealing a slight miss in both earnings per share (EPS) and revenue compared to forecasts. The company posted an EPS of $0.44, just below the anticipated $0.45, and revenue came in at $3.77 billion against a forecast of $3.79 billion. Despite this, Tractor Supply announced a 4.5% increase in its quarterly cash dividend to $0.23 per share and expanded its share repurchase program by $1 billion, bringing the total authorized amount to $7.5 billion. In terms of analyst outlooks, Piper Sandler reiterated an Overweight rating for Tractor Supply with a price target of $65, highlighting potential sales growth from increased demand for backyard chickens. DA Davidson also maintained a Buy rating with the same price target, emphasizing Tractor Supply’s product advantage over competitors like Amazon (NASDAQ:AMZN). These developments are part of Tractor Supply’s ongoing strategy to drive growth and shareholder returns.

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