Episode
Tractor Supply Stock: Cut in Half, ~16x Earnings — Quality on Sale, or a Broken Grower? (TSCO)
- Published
- Jul 25, 2026
- Duration seconds
- 852
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Summary
Tractor Supply Company (TSCO) Q2 2026 — Tractor Supply (TSCO) reported Q2 2026 and missed: net sales rose 2.3% to $4.54B, but comparable-store sales fell 1.5% (transaction count -1.7%, ticket +0.2%), and adjusted diluted EPS of $0.81 (flat YoY) came in below the Street's ~$0.85. GAAP EPS dropped 14.9% to $0.69, dragged by a $65.8M Petsense restructuring charge (closing ~75 stores) plus $9.5M of VIP Petcare acquisition costs. Operating income fell 19.2% to $467.1M (-5.1% adjusted to $548.3M); net income fell 16.1% to $360.7M. Gross margin actually expanded to 37.1% (37.2% adjusted) on tariff benefits and cost discipline, but SG&A deleveraged to 26.8% of sales. Management blamed an unusually adverse May (comps were positive in April and June), cut its FY2026 outlook (net sales +2.5% to +3.5%, comps -1% to flat, adjusted EPS $1.90-$2.00), and withdrew the long-term framework from its December 2024 Investor Day (a new one comes with Q4). The company still returned $260.9M in Q2 ($135.3M buybacks at ~$34.92 avg + $125.6M dividends) and opened 28 Tractor Supply and 3 Petsense stores (2,672 total). The stock has been cut roughly in half over the past year to ~$31, leaving it near ~16x forward earnings — a decade-low multiple — with a ~3.1% dividend raised 16 straight years. Our owner-earnings / DCF pegs fair value near $35 — about 13% above the price, in line with the Street's ~$37 average. Our call: HOLD, 3/5. Tractor Supply — the largest rural lifestyle retailer in America, an 88-year-old franchise built on needs-based demand like animal feed and farm essentials — has quietly been cut in half, from ~$63 to ~$31. The reason: growth stalled. In Q2 2026 the company missed, with comparable-store sales falling 1.5% and adjusted EPS of $0.81 landing below the ~$0.85 Street es…