why tractor supply company is the most mispriced stock on the market right now
pulling data straight from their fiscal 2025 10-k and the q1 2026 10-q. wall street has completely beaten this stock down to around $29.36 per share, down massively from its highs near $64. everyone is panic selling because retail sentiment is trash and short-term margins took a hit, but the underlying business is completely solid and the valuation math points straight to a massive 150% upside play for anyone willing to buy when others are scared.
lets look at the actual financials instead of listening to market noise. for the full fiscal year 2025, tsco posted net sales of $15.52 billion, up 4.3% from 2024. net income held flat at $1.10 billion, and diluted eps came in at $2.06. then moving into 2026, their q1 report showed net sales climbing another 3.6% year-over-year to $3.59 billion. management even reiterated their full-year 2026 guidance expecting net sales growth between 4% and 6% with net income landing around $1.11 billion to $1.17 billion.
now let's run the enterprise value and dcf numbers based on the current $29.36 price. market cap is sitting around $15.4 billion. factoring in roughly $2.14 billion in total debt and stripping out minor cash holdings gives an enterprise value of about $17.3 billion. against an ltm ebitda of roughly $1.96 billion, that gives us an ev/ebitda multiple of around 8.8x. for the dominant rural lifestyle retailer in the country with over 2,600 stores and steady gross margins above 36%, an 8.8x multiple is absurdly cheap.
doing a proper dcf model here - if you take their baseline operating cash flow of over $1.6 billion, project a modest 5% compound annual growth rate driven by their ongoing new store openings and digital expansion, use a standard 8% wacc and a 2.5% terminal growth rate, the intrinsic value is way higher than $30. even if we factor in risks like potential macro headwinds pushing the stock lower toward a temporary bottom around $20 if retail sentiment gets uglier, the risk-reward ratio is heavily skewed in favor of the buyer.
a short-term 30% drop is always a risk worth keeping in mind, but the setup offers an asymmetric path to a 140% return as multiples normalize back toward historical averages and earnings compound over the next few years. they are still actively buying back shares and paying a solid dividend, so getting in while the market is ignoring them is a classic high-win-rate play.