Tractor Supply (TSCO)

Rural goods retailer Tractor Supply (NASDAQ:TSCO) met Wall Street’s revenue expectations in Q3 CY2025, with sales up 7.2% year on year to $3.72 billion. Its GAAP profit of $0.49 per share was in line with analysts’ consensus estimates.

Company Overview

Started as a mail-order tractor parts business, Tractor Supply (NASDAQ:TSCO) is a retailer of general goods such as agricultural supplies, hardware, and pet food for the rural consumer.

Some retailers try to sell everything under the sun, while others—appropriately called Specialty Retailers—focus on selling a narrow category and aiming to be exceptional at it. Whether it’s eyeglasses, sporting goods, or beauty and cosmetics, these stores win with depth of product in their category as well as in-store expertise and guidance for shoppers who need it. E-commerce competition exists and waning retail foot traffic impacts these retailers, but the magnitude of the headwinds depends on what they sell and what extra value they provide in their stores.

Competitors that offer one or more overlapping product categories include Home Depot (NYSE:HD), Lowe’s (NYSE:LOW), and Petco Health and Wellness (NASDAQ:WOOF).

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.

With $15.4 billion in revenue over the past 12 months, Tractor Supply is one of the larger companies in the consumer retail industry and benefits from a well-known brand that influences purchasing decisions.

As you can see below, Tractor Supply grew its sales at a decent 10.9% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts) as it opened new stores and expanded its reach.

This quarter, Tractor Supply grew its revenue by 7.2% year on year, and its $3.72 billion of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 6.6% over the next 12 months, a deceleration versus the last six years. We still think its growth trajectory is attractive given its scale and implies the market sees success for its products.

Number of Stores

A retailer’s store count often determines how much revenue it can generate.

Tractor Supply sported 2,364 locations in the latest quarter. Over the last two years, it has opened new stores quickly, averaging 2.5% annual growth. This was faster than the broader consumer retail sector.

When a retailer opens new stores, it usually means it’s investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance.

Same-Store Sales

The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales provides a deeper understanding of this issue because it measures organic growth at brick-and-mortar shops for at least a year.

Tractor Supply’s demand within its existing locations has barely increased over the last two years as its same-store sales were flat. Tractor Supply should consider improving its foot traffic and efficiency before expanding its store base.

In the latest quarter, Tractor Supply’s same-store sales rose 3.9% year on year. This growth was an acceleration from its historical levels, which is always an encouraging sign.

Gross profit margins are an important measure of a retailer’s pricing power, product differentiation, and negotiating leverage.

Tractor Supply’s unit economics are higher than the typical retailer, giving it the flexibility to invest in areas such as marketing and talent to reach more consumers. As you can see below, it averaged a decent 36.4% gross margin over the last two years. That means for every $100 in revenue, $63.62 went towards paying for inventory, transportation, and distribution.

In Q3, Tractor Supply produced a 37.4% gross profit margin, in line with the same quarter last year. On a wider time horizon, the company’s full-year margin has remained steady over the past four quarters, suggesting it strives to keep prices low for customers and has stable input costs (such as labor and freight expenses to transport goods).

Operating margin is an important measure of profitability for retailers as it accounts for all expenses necessary to run a store, including wages, inventory, rent, advertising, and other administrative costs.

Tractor Supply’s operating margin might fluctuated slightly over the last 12 months but has remained more or less the same, averaging 9.8% over the last two years. This profitability was higher than the broader consumer retail sector, showing it did a decent job managing its expenses.

Looking at the trend in its profitability, Tractor Supply’s operating margin might fluctuated slightly but has generally stayed the same over the last year. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Tractor Supply generated an operating margin profit margin of 9.2%, in line with the same quarter last year. This indicates the company’s cost structure has recently been stable.

If you’ve followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can’t use accounting profits to pay the bills.

Tractor Supply has shown impressive cash profitability, giving it the option to reinvest or return capital to investors. The company’s free cash flow margin averaged 4.9% over the last two years, better than the broader consumer retail sector.

Taking a step back, we can see that Tractor Supply’s margin expanded by 2.6 percentage points over the last year. This shows the company is heading in the right direction, and we can see it became a less capital-intensive business because its free cash flow profitability rose while its operating profitability was flat.

Tractor Supply broke even from a free cash flow perspective in Q3. This result was good as its margin was 3.8 percentage points higher than in the same quarter last year, building on its favorable historical trend.

EPS and free cash flow tell us whether a company was profitable while growing its revenue. But was it capital-efficient? Enter ROIC, a metric showing how much operating profit a company generates relative to the money it has raised (debt and equity).

Tractor Supply’s five-year average ROIC was 32.9%, placing it among the best consumer retail companies. This illustrates its management team’s ability to invest in highly profitable ventures and produce tangible results for shareholders.

Tractor Supply reported $184.6 million of cash and $5.72 billion of debt on its balance sheet in the most recent quarter. As investors in high-quality companies, we primarily focus on two things: 1) that a company’s debt level isn’t too high and 2) that its interest payments are not excessively burdening the business.

With $1.97 billion of EBITDA over the last 12 months, we view Tractor Supply’s 2.8× net-debt-to-EBITDA ratio as safe. We also see its $40.16 million of annual interest expenses as appropriate. The company’s profits give it plenty of breathing room, allowing it to continue investing in growth initiatives.

Revenue, EPS, and full-year EPS were roughly in line with expectations. Overall, this was a quarter without any positive surprises. The stock traded down 3.6% to $52.90 immediately after reporting.

Updated: December 3, 2025 at 9:39 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Tractor Supply, you should also grasp the company’s longer-term business quality and valuation.

Tractor Supply isn’t a bad business, but we’re not clamoring to buy it here and now. Although its revenue growth was a little slower over the last three years, its growth over the next 12 months is expected to be higher. And while Tractor Supply’s poor same-store sales performance has been a headwind, its stellar ROIC suggests it has been a well-run company historically.

Tractor Supply’s P/E ratio based on the next 12 months is 23.4x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're fairly confident there are better stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $63.74 on the company (compared to the current share price of $54.06).