Tractor Supply Company: The Harvest Is Still Ahead

UBS preview of Tractor Supply Company's (TSCO.US) 3Q results. While the market wants to see TSCO's investment case get back to the compounder status it once enjoyed, we don't think this will be the quarter that restores the stock to that level. The debate has shifted from near-term earnings to normalized earnings power. We forecast a flat comp in 3Q (consensus -1.2%) versus market expectations of a 1-2% increase, and expect TSCO to reiterate its full-year 2026 outlook (flat to -1% comp, 8.5-8.8% operating margin, $1.90-2.00 EPS). Attention is increasingly turning to 2027, where lapping roughly $100-150mm of tariff refunds, DC start-up costs and transportation-cost normalization drive uncertainty. Pet trends appear to be improving, with Freshpet on track for at least 700 stores by year-end and ~75 underperforming Petsense stores to close. At ~17x NTM earnings, valuation reflects balanced risk-reward and shares should remain range-bound. Neutral rating, price target US$33.00.