Tractor Supply Company TSCO has concluded its buyout of Allivet, a privately held online pet pharmacy. The transaction marks a significant strategic move for Tractor Supply as it expands the company’s footprint in the growing pet wellness and animal health sector.
Deeper Look at Tractor Supply’s Recent Acquisition
Founded in 1992, Allivet has become a leading online pet and animal pharmacy, holding licenses across all 50 states. With three strategically located distribution centers, the company efficiently meets its customer demands, offering next-day delivery to most regions in the United States. Allivet’s platform simplifies pet care by ensuring easy access to trusted brand-name medications, expert pharmaceutical guidance and hassle-free automatic deliveries through its auto-ship program.
The acquisition complements and expands Tractor Supply's existing ‘Life Out Here’ range of products and services. Tractor Supply aims to offer its 37 million Neighbor's Club members an affordable and reliable pet and animal prescription service while introducing the brand to Allivet’s customer base.
The Allivet acquisition increases Tractor Supply's total addressable market by $15 billion, bringing this to $225 billion. Once fully scaled, the deal is expected to unlock a $1 billion revenue opportunity.
TSCO’s Store Expansion and Growth Strategy
Tractor Supply remains committed to expanding its physical store footprint and leveraging technology to drive traffic and boost revenues. The company is on track to grow its domestic store count to 2,500 in the long term. As of Sept. 28, 2024, Tractor Supply operated 2,270 stores across 49 states. Tractor Supply also owns and operates Petsense by Tractor Supply, a specialty retailer offering products and services tailored for pet owners. As of Sept. 28, 2024, the company operated 205 Petsense by Tractor Supply stores across 23 states.
This dual approach, strategic acquisitions like Allivet and consistent store expansion, positions Tractor Supply for sustained growth in the physical and digital retail spaces.
What Else is Driving TSCO Growth?
Tractor Supply continues to invest in its omnichannel capabilities, offering services like curbside pickup, same-day and next-day delivery, along with an upgraded website and a redesigned mobile app. The company plans to leverage AI technologies to enhance search functionality, streamline the checkout process and introduce a refreshed, personalized homepage experience for customers.
Project Fusion is the company’s state-of-the-art space productivity program, designed to enhance the customer experience within its established store network. Currently, 45% of the company’s stores feature the Project Fusion layout, along with more than 550 garden centers. These strategic investments aim to drive higher market share and improve productivity across both existing and new locations. By expanding product offerings, simplifying the shopping process and introducing modern services, Tractor Supply is better equipped to meet its customer needs efficiently.
Tractor Supply is focusing on strengthening its Neighbor's Club loyalty program, which has seen significant growth in customer acquisition and retention. Investments in the program have led to strong results with Neighbor’s Club comparable sales surpassing the company’s overall sales in the third quarter of 2024. This success further underscores Tractor Supply’s commitment to building long-term customer relationships.
TSCO Price Performance vs. Industry
Image Source: Zacks Investment Research
TSCO Outpaces Industry in Performance
Shares of this Zacks Rank #3 (Hold) company have gained 22.3% in the past year and outperformed the industry’s growth of 9.3%.
TSCO stock has been a strong performer, yet its valuation is still a subject of discussion. Currently, the stock is priced at a premium compared with the industry average. The company’s price-to-earnings ratio indicates that its growth potential may already be factored into price.
TSCO's forward 12-month price-to-earnings ratio is 25.61X, higher than the industry’s ratio of 18.57X. This implies that investors are paying a premium compared with the company’s expected earnings growth. TSCO has a Value Score of C.
Image Source: Zacks Investment Research
Wrapping Up: TSCO’s Path to Continued Growth
Tractor Supply’s acquisition of Allivet is poised to drive significant growth. The integration of Allivet expands TSCO’s product offerings and enhances its ability to serve customers with reliable pet and animal prescription services. With TSCO’s ongoing store expansion, omnichannel investments and the strengthening of its Neighbor's Club loyalty program, the company is well-positioned to capitalize on the growing pet care trend and strengthen its competitive edge in physical and digital retail spaces.
Stocks to Consider
Bark, Inc. BARK a dog-centric company, provides products, services and content for dogs. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The consensus estimate for Bark’s current fiscal-year sales and earnings indicates growth of 2% and 81.8%, respectively, from the prior-year reported levels. BARK delivered a trailing four-quarter average earnings surprise of 16.7%.
Freshpet Inc. FRPT manufactures, distributes and markets natural fresh meals and treats for dogs and cats. It currently carries a Zacks Rank #2. FRPT delivered a trailing four-quarter earnings surprise of 144.5%, on average.
The Zacks Consensus Estimate for Freshpet’s current financial-year sales and earnings indicates growth of 27.2% and 228.6%, respectively, from the prior-year reported levels.
US Foods Holding Corp. USFD engages in marketing, sale and distribution of fresh, frozen and dry food and non-food products to foodservice customers in the United States. It currently carries a Zacks Rank #2. USFD delivered an earnings surprise of 3.7% in the last reported quarter.
The Zacks Consensus Estimate for US Foods Holding’s current fiscal-year sales and earnings indicates growth of 6.4% and 18.6%, respectively, from the prior-year reported levels.
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Tractor Supply Company (TSCO) : Free Stock Analysis Report
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