Shares of retail chain Tractor Supply(NASDAQ: TSCO) slumped on Thursday after the company reported financial results for its third quarter of 2024. As of 1 p.m. ET, Tractor Supply stock had dropped 5%.
Steady business but lacking growth
Tractor Supply has nearly 2,300 stores across the U.S., selling things such as gardening supplies, animal feed, and more. Demand is steady but not necessarily growing right now. The company's Q3 revenue was up almost 2% year over year to $3.5 billion, thanks to the opening of some new locations. But same-store sales slipped by 0.2%.
Analysts had hoped for slightly better sales from Tractor Supply. However, the company did well regarding profitability. Its gross margin improved from less than 37% in the prior-year period to slightly above 37% in Q3. And even though its net income fell by 5% to $242 million, this was a little better than analysts anticipated.
Still, investors are having a hard time getting excited about Tractor Supply stock today, given its lack of growth.
Patience with Tractor Supply stock may be rewarded
Tractor Supply's management isn't taking its lackluster growth lying down. The company is acquiring pet pharmacy e-commerce company Allivet, and I'm excited about the possibilities here. Many investors don't realize that one-quarter of this business is attributed to companion animals -- pets. Investing in a pet e-commerce company could help it capture a greater amount of spending from its loyal customer base.
It will take time to play out. But Tractor Supply is one of the steadiest businesses out there, with a long track record of growth and shareholder returns. In short, there's still good reason for shareholders to be patient, waiting for growth opportunities such as Allivet to eventually play out.
Should you invest $1,000 in Tractor Supply right now?
Before you buy stock in Tractor Supply, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Tractor Supply wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $855,238!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. TheStock Advisorservice has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of October 21, 2024
Jon Quast has no position in any of the stocks mentioned. The Motley Fool recommends Tractor Supply. The Motley Fool has a disclosure policy.