May 24, 2016
by Todd Miller
Tractor Supply Company (NASDAQ:TSCO) shares have provided investors solid profits thus far this year as the stock has advanced 10.37% for the year. Shareholders are walking with an extra pep in their step as their market savvy appears to be paying off in a big way.
What This Means
Let’s look at some key indicators to assess this stock:
Earnings Per Share (EPS):
EPS is the amount of money each share would be worth if a company were to pay out all of its profits to the shareholders. Earnings Per Share can be calculated by dividing the company’s profit total by the number of its shares. For example, if a company’s profit is $400 million and there are 20 million shares, the EPS is $20. EPS is a great way to tell how companies in the same industry compare with one another. If a company shows consistently steady earnings growth, it will often outperform companies with more volatile earnings over a long period of time. Tractor Supply Company (NASDAQ:TSCO) shares have an EPS (trailing 12 months) of 3.09 . Their EPS growth this past year was 12.70% and 11.30% for the past five years. Experts on Wall Street predict Tractor Supply Company (NASDAQ:TSCO)’s stock to grow 14.34% next year and 14.83% for the next five.
Price to earnings (P/E) ratio:
P/E ratio is the relationship between a company’s earnings and its stock price. It is calculated by dividing the current price per share of a company’s stock by its earnings per share. For example, if a company’s stock sells for $100 per share and its earnings per share are $10, then it has a P/E of 10 ($100 divided by $10). Tractor Supply Company’s shares have a P/E of 30.42. The P/E ratio can tell you if a stock’s price is too high or low compared to its earnings. Some investors might consider a company that has a high P/E of being overpriced, but sometimes a company that has a high P/E might offer a high returns and improved P/E in the future.
Price to earnings ratio to growth ratio (PEG):
PEG helps clarify the P/E ratio. It is calculated by dividing the P/E ratio with the company’s projected earnings growth. PEG can tell you if a stock might be a good value. If the number is low, the less you will likely have to pay to get in on the company’s expected earnings growth in the future. Tractor Supply Company (NASDAQ:TSCO) has a PEG of 2.05 .
Disclaimer: The views, opinions, and information expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any company stakeholders, financial professionals, or analysts. Examples of analysis performed within this article are only examples. They should not be utilized to make stock portfolio or financial decisions as they are based only on limited and open source information. Assumptions made within the analysis are not reflective of the position of any analysts or financial professionals.