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.
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Jon Quast has no position in any of the stocks mentioned. The Motley Fool recommends Tractor Supply. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
