Head-To-Head Survey: Tractor Supply (TSCO) and Fastenal (FAST)

Tractor Supply (NASDAQ: TSCO) and Fastenal (NASDAQ:FAST) are both retail/wholesale companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.

Profitability

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This table compares Tractor Supply and Fastenal’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tractor Supply 5.82% 30.81% 14.76%
Fastenal 13.66% 28.69% 20.33%

Earnings and Valuation

This table compares Tractor Supply and Fastenal’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tractor Supply $7.26 billion 1.00 $422.59 million $3.33 17.61
Fastenal $4.39 billion 3.31 $578.60 million $1.93 26.18

Fastenal has lower revenue, but higher earnings than Tractor Supply. Tractor Supply is trading at a lower price-to-earnings ratio than Fastenal, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Tractor Supply has a beta of 1.28, suggesting that its share price is 28% more volatile than the S&P 500. Comparatively, Fastenal has a beta of 0.99, suggesting that its share price is 1% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for Tractor Supply and Fastenal, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tractor Supply 1 14 8 0 2.30
Fastenal 1 5 7 2 2.67

Tractor Supply currently has a consensus price target of $73.33, indicating a potential upside of 25.04%. Fastenal has a consensus price target of $53.64, indicating a potential upside of 6.16%. Given Tractor Supply’s higher probable upside, equities analysts plainly believe Tractor Supply is more favorable than Fastenal.

Dividends

Tractor Supply pays an annual dividend of $1.08 per share and has a dividend yield of 1.8%. Fastenal pays an annual dividend of $1.48 per share and has a dividend yield of 2.9%. Tractor Supply pays out 32.4% of its earnings in the form of a dividend. Fastenal pays out 76.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Fastenal has increased its dividend for 7 consecutive years. Fastenal is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

84.1% of Tractor Supply shares are owned by institutional investors. Comparatively, 85.2% of Fastenal shares are owned by institutional investors. 1.6% of Tractor Supply shares are owned by insiders. Comparatively, 0.6% of Fastenal shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Fastenal beats Tractor Supply on 10 of the 18 factors compared between the two stocks.

About Tractor Supply

Tractor Supply Co. engages in the retail sale of farm and ranch products. It operates retail farm and ranch stores and focuses on supplying the lifestyle needs of recreational farmers and ranchers, as well as tradesmen and small businesses. The company operates its retail stores under the names: Tractor Supply Company, Del’s Feed & Farm Supply, and Petsense. Its product categories includes clothing and footwear; dog, cat and pet supplies; trailers and accessories; lawn and garden supplies; propane and heating supplies; tools and gun safes; fending; welders and welding supplies; and lawn mowers and power generators. The company was founded by Charles E. Schmidt, Sr. in 1938 and is headquartered in Brentwood, TN.

About Fastenal

Fastenal Company, together with its subsidiaries, engages in the wholesale distribution of industrial and construction supplies in the United States, Canada, and internationally. It offers fasteners, and other industrial and construction supplies under the Fastenal name. The company's fastener products include threaded fasteners, such as bolts, nuts, screws, studs, and related washers, which are used in manufactured products and construction projects, as well as in the maintenance and repair of machines. It also offers miscellaneous supplies and hardware, including various pins and machinery keys, concrete anchors, metal framing systems, wire ropes, strut products, rivets, and related accessories. The company serves the manufacturing market comprising original equipment manufacturers; maintenance, repair, and operations; and non-residential construction market, which includes general, electrical, plumbing, sheet metal, and road contractors. It also serves farmers, truckers, railroads, mining companies, schools, and retail trades; and oil exploration, production, and refinement companies, as well as federal, state, and local governmental entities. As of December 31, 2017, the company distributed its products through a network of 2,383 company owned stores. Fastenal Company was founded in 1967 and is headquartered in Winona, Minnesota.

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