Tractor Supply Stock: Is TSCO Underperforming the Consumer Discretionary Sector?

Brentwood, Tennessee-based Tractor Supply Company (TSCO) is the nation’s leading retailer catering to rural communities and outdoor enthusiasts. With a market capitalization of $28.1 billion, the company operates a vast network of stores, offering an extensive range of products, including livestock feed, farm equipment, pet care essentials, and home improvement supplies. Beyond retail, Tractor Supply has built a loyal customer base through its Neighbor’s Club loyalty program and strong commitment to community-driven initiatives. 

Companies valued at around $10 billion or more are classified as "large-cap stocks," and Tractor Supply is a notable example of this. Its broad merchandise assortment and deep understanding of rural consumer needs have solidified its position as a leading destination for those living and working in the countryside.

But, TSCO shares are currently trading 14.2% below their 52-week high of $61.53, touched on Oct. 15. The stock has fallen marginally over the past three months, outpacing the Consumer Discretionary Select Sector SPDR Fund’s (XLY) 13.6% decline the same time frame.

Despite a 3.6% decline over the last six months, TSCO has managed to gain 3% over the past year. However, its performance still lags behind XLY, which remained relatively stable with a marginal rise over six months and climbed 9.2% over the past year, 

TSCO has been trading beneath its 50-day and 200-day moving averages since the start of this month, signaling bearish momentum.

​On Jan. 30, shares of Tractor Supply plunged 5% after its Q4 earnings release. It reported net sales of $3.77 billion, a 3.1% increase from the same period in 2023. Comparable store sales grew by 0.6%, while EPS decreased to $0.44 from $0.46 in the prior year's quarter. The company opened 26 new Tractor Supply stores and four Petsense by Tractor Supply stores during the quarter.

Looking ahead to fiscal 2025, Tractor Supply plans to open approximately 90 new Tractor Supply stores and 10 new Petsense by Tractor Supply stores. The company expects earnings per share between $2.10 and $2.22, with revenue projected to increase by 5% to 7%. 

Highlighting the contrast in performance, TSCO's competitor, O'Reilly Automotive, Inc. (ORLY), has outperformed the stock. ORLY has gained 20.1% over the past six months and 18.1% over the past 52 weeks.

Analysts are moderately bullish about TSCO's prospects despite its recent underperformance. The stock has a consensus rating of "Moderate Buy" from 31 analysts in coverage. The mean price target is $59.23, which indicates that the stock trades at a premium of 12.2% from the current market prices.