Shares of Tractor Supply (TSCO) are being thought of as a barometer of the stock market. A strong move higher in TSCO is thought of as positive news for the stock market, and the opposite is also true. But I don’t believe TSCO is a good enough stock to be considered in such a light. This companys is only growing around 18% and is also overvalued. I don’t think TSCO moves much in the next year, even though I see the stock market healthy and moving higher.
One Year Chart
Tractor Supply’s stock has been solid from lows-to-highs. But now with a P/E of 27 (up from 25 last quarter) TSCO seems to have lost its momentum. The company hasn’t beaten by much the last two quarters, and during that time estimates have ticked higher only slightly. Look at the quarterly profits along the bottom (as well as Estimates) and you can see for yourself this company is growing in the high-teens. 27 times earnings is a lot for this stock.
Fair Value
This company should grow profits 18% a year. Plus a little dividend of between one-half and one percent. Estimates are rising a bit, so the P/E should be a little higher than norm. And this is a quality company that has solid consistency in growing almost every year. My Fair Value P/E is 23, but could be 22. TSCO is a little high now, and could be this price a year from now.
Sharek’s Take
Tractor Supply is being thought of as a barometer of the stock market, but I just don’t get it. Sure TSCO is a solid 18% grower, but the stock’s gotten ahead of itself. TSCO’s not worth 27 times earnings. I feel the stock will go back-and-forth for a year and be around this price a year from today.
View the Earnings Table here. View the Profit History here.View the Ten Year Chart here.
