Shares of retail chain Tractor Supply (TSCO 1.34%) slipped on Thursday after the company reported financial results for its fourth quarter of 2024. As of 10:45 a.m. ET today, its stock was down about 5%.
Slow growth and uninspiring guidance
Tractor Supply stock is slipping because of several little disappointments, nothing major. The company had fourth quarter net sales of nearly $3.8 billion, which was up 3% year over year. And its fourth quarter earning per share (EPS) of $0.44 only slipped 3% from last year. But both of these numbers fell just short of expectations.
NASDAQ: TSCO
Key Data Points
Moreover, the rural lifestyle retailer's guidance for 2025 didn't help much. Management expects single-digit sales growth and full-year EPS of $2.10 to $2.22.
By comparison, the analyst community expects numbers toward the high end of Tractor Supply's guidance. Therefore, the guidance doesn't overly inspire confidence because the range includes numbers well below expectations.
Over the years, the stock has usually traded at a price-to-sales (P/S) valuation between 1 and 2. Going into the fourth quarter report, it was trading at the high end of this range, suggesting higher-than-normal expectations. Therefore, the stock slipped today after the company's results didn't live up to these expectations.
What now?
I wouldn't be concerned if I were a Tractor Supply shareholder -- this is a strong business that's just resetting some expectations from investors. The company usually has modest growth, but it does keep making strides.
One area to watch is management's recent acquisition of pet pharmacy company Allivet. The company owns over 200 pet stores under its Petsense brand and sells pet supplies at its Tractor Supply stores. Adding a pet pharmacy business is just one way it can keep finding upside for the business, even though the pace of growth is often modest.
