TRACTOR SUPPLY CO /DE/ (TSCO): what the price assumes

In the published model solve dated 2026-Q2, anchored at $34.90, TRACTOR SUPPLY CO /DE/ (TSCO) is priced for -2.2% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-11.

Generated: 2026-08-31 · Source: https://boothcheck.com/report/TSCO

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7% cost of capital with 4% terminal growth over a 5-year stage (computed at the 7% minimum rate; the CAPM rate 7% sits below it).

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

The price is supported by asset-based and relative-multiple value, while earnings-power/growth-DCF land below the price. A value/asset-supported name, not a pure growth bet.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that justify the price: Asset, Relative Families that call it expensive: Earnings, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 6.9%); the inversion above states its own rate.

Per-Model Detail (n=14)

Economic-Unit Decomposition (Sum Of The Parts)

Only one reportable economic unit is present in the current topology source. Consolidated operating lenses remain available, but there is no multi-unit decomposition.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Interest expense is not separately reported in the latest filings, so interest coverage cannot be computed.

Bullet Takeaways

• Tractor Supply owns a niche the big-box giants never built for: the FY2025 10-K describes a customer base of "homesteaders, animal and pet owners, and all those who enjoy living the rural lifestyle" (accession 0000916365-26-000014), and that focus produces a 36.4 percent gross margin, above Home Depot's 33.3 percent and Lowe's 33.5 percent.
• The risk is a stalled core: Q1 FY2026 comparable store sales rose just 0.5 percent with diluted EPS of $0.31, down 8.8 percent year over year, while the companion animal category dragged comps by more than a full percentage point.
• Watch whether the reaffirmed FY2026 guidance of 1 to 3 percent comparable sales growth holds through the summer quarters, and how quickly the new pet-health push (Allivet, VIP Petcare) shows up in the numbers.

Bull Case

The moat is specificity. Tractor Supply sells to a customer the national chains treat as an afterthought, what its 10-K calls "homesteaders, animal and pet owners, and all those who enjoy living the rural lifestyle", and notes that "Our distinct approach differentiates us from other retailers by concentrating our product assortment and services on these core customers" (accession 0000916365-26-000014). The margin data says the differentiation is real: gross margin of 36.4 percent in fiscal 2025, up 16 basis points, sits above Home Depot's 33.3 percent and Lowe's 33.5 percent, and far above Target's 19.8 percent, even though Tractor Supply is a fraction of their size. Feed, fencing, and animal health products are needs-based purchases bought on trust and proximity, not discretionary projects, which is why the company grew sales 3.6 percent in a quarter when its comparable transactions barely moved. The 10-K attributes the margin gain to "cost management initiatives and the continued execution of an everyday low price strategy" even while absorbing higher tariffs, which is what pricing power in a defensive niche looks like.

The growth algorithm is intact and increasingly digital. Management sees "ample opportunity for new store growth in many existing and new markets" per the 10-K, and opened 40 stores in the first quarter alone. On top of the store base sits the Neighbor's Club loyalty program, which the filing says supplies the customer insights used to personalize engagement across channels, and the Final Mile delivery operation the 10-K calls "a key initiative for driving our direct sales business and our digital sales". The newest layer is pet health: Allivet, an online pet and animal pharmacy acquired in December 2024 for $135 million, expanded the addressable market by an estimated $15 billion, and the May 2026 acquisition of VIP Petcare, the largest U.S. provider of mobile veterinary care, extends the same wallet. Selling prescriptions and vet services to people who already buy their animals' feed at your store is about as adjacent as adjacency gets.

Meanwhile the stock has been repriced as if the franchise were broken. Shares are down roughly 23 percent over the past year, leaving a 3.1 percent dividend yield on a growing payout that consumes only 26 percent of trailing earnings, alongside $876.6 million of trailing-twelve-month capital returns. Guidance calls for comparable sales to reaccelerate to 1 to 3 percent with diluted EPS of $2.13 to $2.23, and the analysts who follow the pet-health pivot see room: Guggenheim trimmed its target to $50 but reiterated a Buy after the VIP Petcare deal. A defensive retailer with sector-leading gross margins, a loyalty flywheel, and a fresh services leg, priced in the lower half of its peer multiple range, is the setup value buyers wait for.

Bear Case

Look at the capital structure before the story. Tractor Supply operates a heavily obligated balance sheet for a retailer with flat comps: book equity works out to just $4.76 per share, about $2.5 billion supporting a $16 billion market value, the equity multiplier runs 4.6 times, and debt-to-equity stands at 0.85 before counting the store leases that make the model work. The cash flow side is tighter than the income statement suggests: trailing free cash flow converts at only 28 percent of reported net income because capex on new stores and distribution eats most of operating cash flow, the March quarter's free cash flow was negative $111 million, and the $876.6 million returned to shareholders over the trailing year exceeded the $553 million of free cash flow generated. None of this is distress, coverage is comfortable and the bankruptcy-risk read is safe, but it means the equity is a thin, levered slice of a capex-hungry machine, and thin slices amplify whatever the operating business does next.

What the operating business is doing next is the problem. Comparable store sales grew 0.5 percent in Q1 FY2026, operating income fell 6.3 percent year over year, and EPS declined 8.8 percent. The companion animal category, the traffic engine of the franchise, dragged comparable sales by more than 100 basis points on weakness in large-dog ownership and under-indexing in cat and premium offerings, and management is answering with acquisitions rather than waiting for the cycle to turn. Competition is not sitting still either; the 10-K lists "general merchandise retailers, home center retailers, pet retailers, specialty and discount retailers, independently-owned retail farm and ranch stores, numerous privately-held regional farm store chains, and farm cooperatives, as well as internet-based retailers" (accession 0000916365-26-000014), and the internet-based end of that list is precisely where pet products migrate.

Tariffs are the margin risk with a paper trail. A 2025 10-Q updated the risk factor in its entirety, disclosing that "Our costs and relationships with certain of our suppliers have been negatively impacted by recent changes in tariffs, and may be further impacted in the future" (accession 0000916365-25-000163), and the FY2025 10-K concedes gross margin gains were partially offset by higher tariffs and delivery-related transportation costs. The company relies on manufacturers in foreign countries, including China, for merchandise, so the everyday-low-price strategy meets rising input costs head on; something gives, either price position or margin. Add the guidance math: hitting $2.13 to $2.23 in EPS requires comps to accelerate from 0.5 percent to the 1 to 3 percent band every remaining quarter, so a second soft quarter turns a reaffirmation into a cut. For a levered equity where returns to shareholders already outrun free cash flow, that is the sequence the bear is watching for.

Valuation

The price has stopped assuming growth. At $30.43 (July 2026), the market pays about 16 times company-wide operating income, a level that sits below what even a 5 percent per year decline in operating profit would warrant. Read plainly: the market is priced for this business to shrink, and modestly outperforming a shrinking path is enough. Against the company's own recent delivery, low-single-digit sales growth and a 9.3 percent operating margin, the near-term pace the price asks for is inside what the company has demonstrated; the multiple sits in the lower half of its peer range.

The trailing earnings need one decomposition before the multiple means anything. The December 2025 quarter shows a 28 percent net margin in a quarter with a 7.6 percent operating margin, a large one-time item below the operating line, and that gain inflates trailing net income to $1.95 billion, which is what makes the trailing multiple print at 8.2 times. On the company's own guided FY2026 EPS of $2.13 to $2.23, the price sits near 14 times forward earnings, cheaper than the 20 times sector median but not the fire-sale number the trailing print suggests. The method families sort accordingly: the asset-based and peer-multiple lenses find the price supported with room to spare, while the earnings-power and cash-flow lenses read it as expensive, mostly because free cash flow, $553 million trailing, against a 3.4 percent yield, is depressed by the store-building capex cycle. The disagreement maps onto one question: whether today's capex is investment (the multiple lenses' implicit view) or the permanent cost of running the fleet (the cash-flow lenses' view).

The filing-sourced fundamentals under the methods are steady rather than spectacular: gross profit rose 4.8 percent to $5.65 billion in fiscal 2025 with gross margin up 16 basis points to 36.4 percent, gains the 10-K attributes to cost management and everyday low pricing, partially offset by higher tariffs and transportation costs (accession 0000916365-26-000014). Leverage is moderate and well covered, so the balance sheet neither adds urgency nor caps the downside debate. The most concrete way to state the bet: the price requires operating economics far below what the company already earns, roughly a 1.8 percent operating margin by year twelve against 9.3 percent today, so the buyer is being paid to underwrite longevity, not improvement. What would break the thesis is not a missed quarter but evidence the margin structure itself is eroding faster than a 5 percent annual decline path.

Catalysts

The company reported Q1 FY2026 on April 21: net sales up 3.6 percent to $3.59 billion, comparable store sales up 0.5 percent, and diluted EPS of $0.31, a miss that initially sent the stock down double digits, followed by a reaffirmation of the full-year outlook of 1 to 3 percent comparable sales growth and $2.13 to $2.23 in diluted EPS. That reaffirmation is now the load-bearing claim: management is targeting the 1 to 3 percent comp band in each remaining quarter, so the next report is a direct test of whether spring-season demand and the everyday-low-price position recaptured traffic. The companion animal category, which dragged comps by over 100 basis points in Q1 on large-dog ownership pressure, is the swing category to watch.

The pet-health buildout is the active strategic thread. Tractor Supply closed its $135 million acquisition of Allivet, an online pet and animal pharmacy, at the end of December 2024, sizing the addressable-market expansion at $15 billion, and followed on May 28, 2026 by acquiring VIP Petcare, the largest U.S. provider of mobile veterinary care, from PetIQ. Guggenheim trimmed its price target from a higher level to $50 while reiterating a Buy on the news, and the analyst debate now centers on how fast pharmacy and vet services attach to the existing customer base. Execution updates on these two deals, along with the pace of new store openings after a record 40 in Q1, are the datable items on the calendar.

Tariffs remain the running cost-side story. The FY2025 10-K acknowledged gross margin gains were partially offset by higher tariffs and delivery-related transportation costs, and the company's China-exposed supply chain keeps trade policy a quarterly variable for merchandise costs. Management's cost-management initiatives carried the margin higher in fiscal 2025; each coming quarter shows whether that offset continues to outrun the tariff schedule.

Peer Cohorts (Per Segment, With Filing Citations)

Retail (single segment) (reported)

• LOW (LOWE’S COMPANIES, INC.)
• FY2025 10-K: …of return assets are as follows: (In millions) Classification January 31, 2025 February 2, 2024 Anticipated sales returns Other current liabilities $ 167 $ 191 Right of return assets Other current assets 99 111 Deferred revenue - retail and stored-value cards Deferred revenue for retail and stored-value cards are as…
• FY2025 10-K: …for prior periods have been reclassified to conform to the current year presentation. 1 Home Decor includes the following product categories: Appliances, Décor, Flooring, Kitchens & Bath, and Paint 2 Building Products includes the following product categories: Building Materials, Electrical, Lumber, Millwork, and…
• FND (Floor & Decor Holdings, Inc.)
• FY2025 10-K: …separately as a reportable segment. The Company files a consolidated income tax return and does not allocate income taxes and other corporate-level expenses, including interest expense, to Spartan. All material corporate costs are included in the Retail segment. 65 Table of Contents The Company concluded that the…
• FY2025 10-K: …sales. Revenue is recognized when we satisfy the performance obligations in contracts with our customers, which is typically when the customer obtains control of the underlying inventory. The retail and commercial sectors in which we operate are cyclical, and consequently our sales are affected by general economic…
• FAST (FASTENAL CO)
• FY2025 10-K: …us-gaap:SalesRevenueNetMember 2023-01-01 2023-12-31 0000815556 fast:SafetySuppliesMember us-gaap:ProductConcentrationRiskMember us-gaap:SalesRevenueNetMember 2025-01-01 2025-12-31 0000815556 fast:SafetySuppliesMember us-gaap:ProductConcentrationRiskMember us-gaap:SalesRevenueNetMember 2024-01-01 2024-12-31 0000815556…
• FY2025 10-K: …announced a two -for-one stock split of our outstanding common stock. Holders of the Company's common stock, par value $ 0.01 per share, at the close of business on May 5, 2025, received one additional share of common stock for every share of common stock they owned. The stock split took effect at the close of…
• BLDR (Builders FirstSource, Inc.)
• FY2025 10-K: …source most of our requirements without reliance on any particular supplier and that our diversity of suppliers affords us purchasing flexibility. Due to our centralized procurement platform for commodity wood products and corporate oversight of purchasing programs, we believe we are able to maximize the advantages…
• FY2025 10-K: …remaining under its current share repurchase program. Debt Transactions On May 8, 2025, the Company completed a private offering of $750.0 million in aggregate principal amount of 6.750% senior unsecured notes due 2035 ("6.75% 2035 notes"), at an issue price equal to 100% of par value. The net proceeds from the…
• SHW (THE SHERWIN-WILLIAMS COMPANY)
• FY2025 10-K: …in long-term growth initiatives, including increased spending from net new store openings and costs to support higher sales. The Consumer Brands Group's SG&A increased $32.8 million, or 3.8% for the year primarily due to costs related to the October 2025 Suvinil acquisition, increased marketing & advertising and…
• FY2025 10-K: …offered by paying within 30 days of being invoiced. The Company estimates variable consideration for these sales on the basis of both historical information and current trends to estimate the expected amount of discounts to which customers are likely to be entitled. The remaining revenue is governed by long-term…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.