Tractor Supply (NASDAQ:TSCO) versus GAP (NYSE:GAP) Head-To-Head Survey

Tractor Supply (NASDAQ:TSCO) and GAP (NYSE:GAP) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, dividends and risk.

Institutional & Insider Ownership

98.7% of Tractor Supply shares are owned by institutional investors. Comparatively, 58.8% of GAP shares are owned by institutional investors. 0.6% of Tractor Supply shares are owned by company insiders. Comparatively, 31.0% of GAP shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Tractor Supply pays an annual dividend of $0.96 per share and has a dividend yield of 2.7%. GAP pays an annual dividend of $0.70 per share and has a dividend yield of 3.1%. Tractor Supply pays out 50.0% of its earnings in the form of a dividend. GAP pays out 20.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Tractor Supply has raised its dividend for 16 consecutive years and GAP has raised its dividend for 1 consecutive years. GAP is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Tractor Supply and GAP”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tractor Supply	$15.52 billion	1.19	$1.10 billion	$1.92	18.40
GAP	$15.37 billion	0.52	$816.00 million	$3.35	6.77

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

Risk & Volatility

Tractor Supply has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500. Comparatively, GAP has a beta of 2.08, meaning that its share price is 108% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings for Tractor Supply and GAP, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tractor Supply	2	13	13	0	2.39
GAP	1	10	5	2	2.44

Tractor Supply currently has a consensus target price of $39.31, indicating a potential upside of 11.24%. GAP has a consensus target price of $27.36, indicating a potential upside of 20.70%. Given GAP’s stronger consensus rating and higher possible upside, analysts plainly believe GAP is more favorable than Tractor Supply.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Tractor Supply	6.42%	41.74%	9.42%
GAP	8.14%	19.72%	5.94%

About Tractor Supply

Tractor Supply Company operates as a rural lifestyle retailer in the United States. The company offers various merchandise, including livestock and equine feed and equipment, poultry, fencing, and sprayers and chemicals; food, treats, and equipment for dogs, cats, and other small animals, as well as dog wellness products; seasonal and recreation products comprising tractors and riders, lawn and garden, bird feeding, power equipment, and other recreational products; truck, tool, and hardware products, such as truck accessories, trailers, generators, lubricants, batteries, and hardware and tools; and clothing, gift, and décor products consist of clothing, footwear, toys, snacks, and decorative merchandise. It provides its products under the 4health, Paws & Claws, American Farmworks, Producer's Pride, Bit & Bridle, Red Shed, Blue Mountain, Redstone, C.E. Schmidt, Retriever, Country Lane, Ridgecut, Countyline, Royal Wing, Country Tuff, Strive, Dumor, Traveller, Farm Table, Treeline, Groundwork, TSC Tractor Supply Co, Huskee, Untamed, and JobSmart brand names. The company operates its retail stores under the Tractor Supply Company, Petsense by Tractor Supply, and Orscheln Farm and Home names; and operates websites under the TractorSupply.com and Petsense.com names. It sells its products to recreational farmers, ranchers, and others. Tractor Supply Company was founded in 1938 and is based in Brentwood, Tennessee.

About GAP

Gap, Inc. operates as a global apparel retail company, which offers clothing, apparel, accessories, and personal care products for men, women, and children. The firm operates through the following segments: Gap Global, Old Navy Global, Banana Republic Global, Athleta, and Other. The Gap Global segment includes apparel and accessories for men and women under the Gap brand, along with the GapKids, BabyGap, GapMaternity, GapBody, and GapFit collections. The Old Navy Global segment offers clothing and accessories for adults and children. The Banana Republic Global segment provides clothing, eyewear, jewelry, shoes, handbags, and fragrances. The Athleta segment offers fitness apparel for women. The company founded by Donald G. Fisher and Doris F. Fisher in July 1969 and is headquartered in San Francisco, CA.