Urban American shoppers have department stores like Walmart and Target to satisfy their needs.
Rural America has a retailer called Tractor Supply intending to sell everything needed by acreage owners, farmers, ranchers and country folk.
The stores handle everything from feed and garden tractors to hardware. Example: a friend lost a piece of a die-cast model tractor. Tractor Supply had the part.
The company is one of the largest sellers of garden tractors and related equipment in the United States.
The Red Deer-based Peavey Mart chain is the closest thing to a Tractor Supply in Canada but is smaller in scope of inventory.
Tennessee-based Tractor Supply started in 1940 with one store in Minot, N.D. and has expanded to 2,370 stores in 49 states plus 106 Petsense stores in 23 states.
Expansion has taken place through new stores and acquisition of smaller chains. The company plans to have 3,200 Tractor Supply stores by 2029.
Two in-store expansion projects involve doubling the number of stores with garden centres to 1,000 from 550 and renovation of all stores by 2029, with about half completed.
Management has increased sales per square foot from $271 five years ago to $382 with a goal of $460 by 2029.
Tractor Supply has also expanded more into the lucrative pet food business with acquisition of Alivet, a pet care chain.
The Tractor Supply shares split five for one in December and haven’t done that well since, settling at a recent $51.62US, down from the year high of $62.57.
When shares split some investors often sell off and take profits. The main driver of the recent share price decline has been lacklustre results in 2024.
The first quarter was excellent with a 3.5 per cent increase in same-store sales. Quarters two and three were disappointing with decreased same-store sales of .5 per cent and .2 per cent.
The company maintained the outlook for $3.30 earnings per share for the year but investors, accustomed to steady growth, did some bailing out.
Dividends have grown annually with yield at 1.7 per cent. Debt is not that high with $21.7 billion and $9.7 billion assets.
The stock price, trading at 25.8 times earnings, seems a tad rich, especially when price charts indicate potential stock for further decline.
Those same charts show investors are accumulating shares at these price levels.
Yours Truly has watched the shares’ spectacular rise for 10 years while awaiting a buying opportunity. The shares are up 187 per cent in the last five years.
An investor with a huge appetite for risk might want to buy now and hold for the long term.
This is one of those stocks that always seems high priced as investors put a premium on quality of management and growth prospects.
A more conservative investor might wait for further retracing of the price from the current level.
Tractor Supply definitely belongs on the watchlist.
CAUTION: Remember when investing, consult your adviser and do your homework before buying any security. Bizworld does not recommend investments.
Ron Walter can be reached at [email protected]
The views and opinions expressed in this article are those of the author, and do not necessarily reflect the position of this publication.
