Should You Investigate Tractor Supply Company (NASDAQ:TSCO) At US$286?

Tractor Supply Company (NASDAQ:TSCO) led the NASDAQGS gainers with a relatively large price hike in the past couple of weeks. The recent jump in the share price has meant that the company is trading at close to its 52-week high. As a large-cap stock with high coverage by analysts, you could assume any recent changes in the company’s outlook is already priced into the stock. But what if there is still an opportunity to buy? Let’s examine Tractor Supply’s valuation and outlook in more detail to determine if there’s still a bargain opportunity.

See our latest analysis for Tractor Supply

Is Tractor Supply Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 16.10% above our intrinsic value, which means if you buy Tractor Supply today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $246.07, then there isn’t really any room for the share price grow beyond what it’s currently trading. Furthermore, Tractor Supply’s low beta implies that the stock is less volatile than the wider market.

What does the future of Tractor Supply look like?

earnings-and-revenue-growth

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. Tractor Supply's earnings growth are expected to be in the teens in the upcoming years, indicating a solid future ahead. This should lead to robust cash flows, feeding into a higher share value.

What This Means For You

Are you a shareholder? It seems like the market has already priced in TSCO’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?

Are you a potential investor? If you’ve been keeping an eye on TSCO, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

So while earnings quality is important, it's equally important to consider the risks facing Tractor Supply at this point in time. At Simply Wall St, we found 2 warning signs for Tractor Supply and we think they deserve your attention.

If you are no longer interested in Tractor Supply, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.