Tractor Supply Company focuses on supplying the lifestyle needs of recreational farmers, tradesmen and small businesses. The company offers a portfolio of products, which include equine, livestock, pet and small animal products, hardware, truck, towing and tool products, seasonal products, including lawn and garden items, power equipment, gifts and toys, work/recreational clothing and footwear, and maintenance products for agricultural and rural use. The company was founded in 1938 and is based in Brentwood, Tennessee.
TSCO Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Tractor Supply Co with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Tractor Supply Co ranked in the 49th percentile in terms of potential gain offered. Moreover, under all the scenarios we modelled, the output consistently forecasted positive returns. The most interesting components of our discounted cash flow analysis for Tractor Supply Co ended up being:
TSCO's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than 29.1% of tickers in our DCF set.
Tractor Supply Co's interest coverage rate -- a measure of gross earnings relative to interest payments -- comes in at 37.46. This coverage rate is greater than that of 91.26% of stocks we're observing for the purpose of forecasting via discounted cash flows.
Relative to other stocks in its sector (Consumer Cyclical), Tractor Supply Co has a reliance on debt greater than merely 18.43% of them.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
CMCSA, CVCO, TTSH, CATO, and ANF can be thought of as valuation peers to TSCO, in the sense that they are in the Consumer Cyclical sector and have a similar price forecast based on DCF valuation.