Argus predicts Tractor Supply will return to new all-time high

Argus spoke about Tractor Supply (NASDAQ:TSCO) on Tuesday after the stock moved sideways in the three weeks since its second-quarter earnings report. Of note, comparable-store sales fell 0.5% for Tractor Supply (TSCO) during quarter compared to an increase of 2.5% in the same period of the previous year, which was negatively affected by a comparable decrease in the average number of transactions of 0.6%.

Analyst Christopher Graja lowered his 2024 EPS forecast for Tractor Supply (TSCO) to $10.35. He said the cut is based on an expectation of lower operating margin in the second half of the year. Graja also lowered his 2025 EPS forecast for TSCO to $11.40 from $11.55, also on a cut in operating margin estimates. Argus’s estimated five-year earnings growth rate is 11%.

Graja and his team believe Tractor Supply (TSCO) stock is worth around $300, based on our 11% multi-year growth rate and analysis using the company’s dividend discount model.

“We model six years of 11% growth at a cost of equity of 7.3%, followed by a five-year transition period in which our growth rate declines to a steady 3% and our cost of equity declines to 7.25%. We use six years, not five, based on the company’s plan to increase store growth.”

The $300 Argus Buy-rated Tractor Supply (TSCO) price target is above the June 18 all-time closing high of $289.98.

At Seeking Alpha, Kody’s Dividends also gave Tractor Supply (TSCO) a Buy rating and recently called the stock “moderately undervalued.”