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 64th percentile in terms of potential gain offered. Specifically, our DCF analysis implies the stock is trading below its fair value by an estimated 73.33%. As for the metrics that stood out in our discounted cash flow analysis of Tractor Supply Co, consider:
The company's debt burden, as measured by earnings divided by interest payments, is 39.28; that's higher than 92.03% of US stocks in the Consumer Cyclical sector that have positive free cash flow.
Tractor Supply Co's weighted average cost of capital (WACC) is 8%; for context, that number is higher than merely 21.34% of tickers in our DCF set.
TSCO's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 3%; for context, that number is higher than merely 21.34% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
Want more companies with a valuation profile/forecast similar to that of Tractor Supply Co? See AMCR, FNKO, JOUT, KIRK, and SBH.
Investors had good reasons to be bullish on Tractor Supply (NASDAQ: TSCO) stock in 2020. Tractor Supply is expected to say that this positive momentum extended through its fourth quarter when it announces those results on January 28. Management in late October predicted that comparable-store sales would rise by between 15% and 20% this quarter.