Why This Top Dividend Growth Stock Is Oversold and Is a No-Brainer Buy Right Now

It has been a challenging clip for galore retailers recently. As consumers go much discerning, Wall Street has aggressively punished galore of the stocks of companies that trust heavy connected discretionary purchases.

And Tractor Supply (NASDAQ: TSCO) is not immune to this pressure. Earlier this year, the agrarian manner retailer reported fourth-quarter net that fell abbreviated of Wall Street's expectations, with absorption citing challenges successful discretionary categories. Since this study successful precocious January, the banal has fallen much than 20%.

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But if you look past the header miss and excavation into the company's underlying concern drivers, a overmuch much encouraging communicative emerges.

The marketplace often lumps Tractor Supply successful with different big-box stores, but that misses the point. The company's concern exemplary relies heavy connected necessities, not trends. And erstwhile you brace that structural resilience with its discounted valuation, the banal looks similar a compelling accidental today.

It's casual to spot wherefore the marketplace was disappointed with Tractor Supply's fourth-quarter update.

Net income accrued conscionable 3.3% twelvemonth implicit twelvemonth to $3.90 billion. Even worse, comparable-store income hardly budged, rising conscionable 0.3%. And operating income declined 6.5% to $297.7 million. Management had to sorb higher promotional costs and navigate continued weakness successful discretionary categories.

"Our 4th fourth results came successful beneath our expectations and reflected a displacement successful user spending, with indispensable categories remaining resilient portion discretionary request moderated," said Tractor Supply CEO Hal Lawton successful the company's net release.

But absorption guided full-year nett income maturation of 4% to 6% and a reacceleration successful comparable-store income to a scope of 1% to 3%. Further, the institution expects net per stock to onshore betwixt $2.13 and $2.23 -- up from the $2.06 it reported for the afloat year.

To recognize wherefore absorption tin confidently usher for dependable net pursuing specified disappointing fourth-quarter results, you person to look nether the hood astatine what Tractor Supply really sells -- beyond its discretionary categories.

According to the company's astir caller 10-K filing, the retailer's livestock, equine, and agriculture class accounts for 27% of sales. Additionally, its income of favored nutrient and supplies (its "Companion Animal" category) relationship for different 24%.