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

Analyst Recommendations

This is a breakdown of current ratings and target prices for Tractor Supply and Ferguson, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tractor Supply 0 10 14 0 2.58
Ferguson 0 0 0 0 N/A

Tractor Supply presently has a consensus target price of $87.29, suggesting a potential downside of 5.39%. Given Tractor Supply’s higher probable upside, equities analysts plainly believe Tractor Supply is more favorable than Ferguson.

Profitability

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

Net Margins Return on Equity Return on Assets
Tractor Supply 6.54% 36.23% 16.51%
Ferguson N/A N/A N/A

Valuation and Earnings

This table compares Tractor Supply and Ferguson’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Tractor Supply $7.26 billion 1.55 $422.59 million $3.33 27.71
Ferguson N/A N/A N/A N/A N/A

Tractor Supply has higher revenue and earnings than Ferguson.

Insider and Institutional Ownership

82.2% of Tractor Supply shares are owned by institutional investors. Comparatively, 0.2% of Ferguson shares are owned by institutional investors. 1.6% of Tractor Supply shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Dividends

Tractor Supply pays an annual dividend of $1.24 per share and has a dividend yield of 1.3%. Ferguson pays an annual dividend of $0.10 per share and has a dividend yield of 1.2%. Tractor Supply pays out 37.2% of its earnings in the form of a dividend. Tractor Supply has raised its dividend for 7 consecutive years. Tractor Supply is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Tractor Supply beats Ferguson on 10 of the 11 factors compared between the two stocks.

Tractor Supply Company Profile

Tractor Supply Company operates rural lifestyle retail stores in the United States. The company offers a selection of merchandise, including equine, livestock, pet, and small animal products necessary for their health, care, growth, and containment; hardware, truck, towing, and tool products; seasonal products, such as heating products, lawn and garden items, power equipment, gifts, and toys; work/recreational clothing and footwear; and maintenance products for agricultural and rural use. As of December 30, 2017, it operated 1,853 retail stores in 49 states. The company operates its retail stores under the Tractor Supply Company, Del's Feed & Farm Supply, and Petsense names. It also operates e-commerce Websites, TractorSupply.com and Petsense.com. The company sells its products to recreational farmers, ranchers, and others, as well as tradesmen and small businesses. Tractor Supply Company was founded in 1938 and is headquartered in Brentwood, Tennessee.

Ferguson Company Profile

Ferguson plc distributes plumbing and heating products in the United States, the United Kingdom, Canada, and Central Europe. It offers plumbing and heating solutions to customers in the residential, municipal, and commercial sectors for repair, maintenance, and improvement (RMI), as well as new construction markets. The company also distributes pipes, valves, fittings, hydrants, meters, and related water management products, as well as offers related services, such as water line tapping and pipe fusion services. In addition, it distributes heating, ventilation, air conditioning, and refrigeration equipment to specialist contractors primarily in the residential and commercial markets for repair and replacement; and PVF products to industrial customers. Further, the company fabricates and supplies fire protection systems primarily to commercial contractors for new construction projects, as well as offers products, services, and solutions to enable maintenance of facilities across various RMI markets. Additionally, it offers supply chain management solutions for PVF and maintenance, repair, and operations. The company sells its home improvement products directly to consumers, as well as through a network of online stores. It operates its B2B business primarily under the Ferguson brand; and B2C business under the Build.com brand. The company provides products and services for maintenance of multi-family properties, government agencies, hospitality, education, healthcare, and other facilities. It operates a network of 2,310 branches and 22 distribution centers. The company was formerly known as Wolseley plc and changed its name to Ferguson plc in July 2017. Ferguson plc was founded in 1887 and is headquartered in Zug, Switzerland.

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