Asset condition analysis
Tractor Supply Company’s total assets were $9.19 billion and $8.49 billion at December 30, 2023 and December 31, 2022, respectively.
Property and equipment, net were $2.44 billion at December 30, 2023, a increase of 17.3%, compared with $2.08 billion at December 31, 2022.
Operating lease right-of-use assets were $3.14 billion as of December 30, 2023, a increase of 6.4% , compared to $2.95 billion at December 31, 2022.
The amount of fixed assets and operating lease assets saw a increase, which show that the company was in expand.
Cash and cash equivalents were $397 million at December 30, 2023, which is minimal.
Total current assets were $3.26 billion at December 30, 2023.
Total current liabilities were $2.18 billion at December 30, 2023.
The current ratio was 1.5 times for fiscal 2023.
Total liabilities were $7 billion at December 30, 2023.
The debt ratio was 76.2% for fiscal 2023.
We think that there is not much room for the company to increase its debt.
Profitability analysis
Tractor Supply Company’s net sales were $14.6 billion, $14.2 billion and $12.7 billion in fiscal 2023, 2022 and 2021, respectively.
The growth rate of net sales was 2.8%, 11.8% for fiscal 2023 and 2022, respectively.
Operating income was $1.48 billion, $1.43 billion and $1.3 billion in fiscal 2023, 2022 and 2021, respectively.
Net income was $1.1 billion, $1.09 billion and $997 million in fiscal 2023, 2022 and 2021, respectively.
Total stockholders’ equity was $2.15 billion and $2.04 billion in fiscal 2023 and 2022, respectively.
The company’s return on equity was 51.2% and 53.4% in fiscal 2023 and 2022, respectively.
ROE was very high.
Cash flow analysis
Net cash provided by operating activities was $1.33 billion, $1.36 billion and $1.14 billion in fiscal 2023, 2022 and 2021, respectively.
Capital expenditure was $754 million, $773 million and $628 million in fiscal 2023, 2022 and 2021, respectively.
We could see that the amount of capital expenditure per year accounted for almost half of net cash provided by operating activities each year.
Repurchase of common stock was $594 million, $700 million and $798.9 million in fiscal 2023, 2022 and 2021, respectively.
Cash dividends paid to shareholders was $449.6 million, $409.6 million and $239 million in fiscal 2023, 2022 and 2021, respectively.
The combined amount of repurchasing stock and cash dividends each year was more than the amount of free cash flow per year in the past three years, which increased debt.
Conclusion
Tractor Supply Company’s ROE was very high.
Net cash from operations was partly setoff by capital expenditure.
Free cash flow is key to valuation.
The ability to repurchase stocks depends on the ability to borrow money.
Tractor Supply Company stock price is $270.13 per share, which is equivalent to $29.16 billion in market capitalization.
We reckon that the reasonable valuation is about $9 billion.
Disclaimer: The content is for reference only and does not constitute investment advice.
Introduction
Tractor Supply Company (the “Company” or “Tractor Supply” or “we” or “our” or “us”) is the largest rural lifestyle retailer in the United States (“U.S.”). The Company is focused on supplying the needs of recreational farmers, ranchers, and all those who enjoy living the rural lifestyle (which we refer to as the “Out Here” lifestyle). We operate retail stores under the names Tractor Supply Company and Petsense by Tractor Supply. Our stores are located primarily in towns outlying major metropolitan markets and in rural communities. We also offer an expanded assortment of products through the Tractor Supply mobile application and online at TractorSupply.com and Petsense.com.
The Company has one reportable industry segment which is the retail sale of products that support the rural lifestyle. At December 30, 2023, we operated 2,414 retail stores in 49 states (2,216 Tractor Supply retail stores and 198 Petsense by Tractor Supply retail stores). Our Tractor Supply stores typically range in size from 15,000 to 20,000 square feet of inside selling space, along with additional outside selling space (“Side Lot”), and our Petsense by Tractor Supply stores have approximately 5,500 square feet of inside selling space. Our online selling websites and our mobile application offer an extended assortment of products beyond those offered in-store and drive traffic into our stores through our buy online and pickup in-store and ship to store programs. Our retail store locations and digital capabilities provide the convenience to allow our customers to engage with us anytime, anywhere and in any way they choose.
On October 12, 2022, the Company completed its acquisition of Orscheln Farm and Home, LLC (“Orscheln” or “Orscheln Farm and Home”). The Company acquired 166 Orscheln stores for approximately $393.4 million, exclusive of cash acquired. Consistent with the remedy reached with the Federal Trade Commission (“FTC”), the Company divested 85 store locations to two buyers, Bomgaars Supply, Inc. (73 stores) and Buchheit Enterprises, Inc. (12 stores), concurrently with the closing of the acquisition. Net proceeds from the store divestitures were approximately $69.4 million. In addition, the Company sold the Orscheln corporate headquarters and distribution center to Bomgaars Supply, Inc. for $10 million in the third quarter of fiscal 2023. The acquisition was financed with cash-on-hand and borrowings under the 2022 Senior Credit Facility (as defined below). All Orscheln stores have been rebranded to Tractor Supply as of the end of fiscal 2023.
