TSCO Financial Analysis

Analysis Date: 1/31/2025

Business Model

Tractor Supply generates revenue primarily through retail sales of livestock/pet products, hardware, tools, seasonal items and clothing through its network of retail stores and digital channels

Revenue Sources

• Retail store sales (primary revenue source)
• Digital/ecommerce sales (over $1.1B in 2024)
• Petsense by Tractor Supply retail stores

Revenue Distribution by Channel

• Retail stores: ~93% of sales
• Digital/ecommerce: ~7% of sales

Income Statement Analysis

• Comparable store sales increased 0.6% driven by 2.3% transaction growth
• Gross margin decreased 9 basis points to 35.2% due to lapping strong prior year
• SG&A expenses increased 60 basis points due to planned growth investments

Balance Sheet Analysis

• Strong inventory position with 7.3% increase year-over-year
• Cash position decreased by 36.7% due to investments and shareholder returns

Cash Flow Analysis

• Generated record $1.4B in operating cash flow
• Returned over $1B to shareholders through dividends and buybacks

Capital Allocation

Balanced approach with investments in growth (new stores, distribution centers), dividends (15th consecutive year of increases), and share repurchases ($560.8M in 2024)

Management Commentary

Strong execution in challenging retail environment with market share gains

Record Neighbor's Club membership with 80% sales penetration

Macro headwinds expected to moderate through 2025

Overall Sentiment: Confident and optimistic about growth opportunities while acknowledging near-term challenges

Recommendation

Rating: Buy

Reason for Rating: Strong market position with multiple growth catalysts

Disclaimer: This analysis is based on company filings and public information. It is for informational purposes only and not financial advice. Past performance does not guarantee future results.

Generated on: 1/31/2025, 12:44:41 PM