Critical Review: Tractor Supply (NASDAQ:TSCO) vs. Petco Health and Wellness (NASDAQ:WOOF)

Tractor Supply (NASDAQ:TSCO) and Petco Health and Wellness (NASDAQ:WOOF) are both retail/wholesale companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, institutional ownership, risk, dividends, earnings and analyst recommendations.

Analyst Ratings

This is a summary of current ratings and recommmendations for Tractor Supply and Petco Health and Wellness, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Tractor Supply	0	8	13	0	2.62
Petco Health and Wellness	0	5	3	0	2.38

Tractor Supply presently has a consensus price target of $61.80, indicating a potential upside of 0.46%. Petco Health and Wellness has a consensus price target of $3.7475, indicating a potential upside of 12.20%. Given Petco Health and Wellness’ higher possible upside, analysts clearly believe Petco Health and Wellness is more favorable than Tractor Supply.

Insider and Institutional Ownership

98.7% of Tractor Supply shares are held by institutional investors. 0.7% of Tractor Supply shares are held by insiders. Comparatively, 4.4% of Petco Health and Wellness shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Risk and Volatility

Tractor Supply has a beta of 0.75, suggesting that its share price is 25% less volatile than the S&P 500. Comparatively, Petco Health and Wellness has a beta of 1.72, suggesting that its share price is 72% more volatile than the S&P 500.

Valuation and Earnings

This table compares Tractor Supply and Petco Health and Wellness”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Tractor Supply	$14.88 billion	2.19	$1.10 billion	$2.04	30.16
Petco Health and Wellness	$6.12 billion	0.17	-$101.82 million	($0.24)	-13.92

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

Profitability

This table compares Tractor Supply and Petco Health and Wellness’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Tractor Supply	7.18%	46.83%	10.73%
Petco Health and Wellness	-1.10%	-4.29%	-0.92%

Summary

Tractor Supply beats Petco Health and Wellness on 11 of the 14 factors compared between the two stocks.

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 Petco Health and Wellness

Petco Health and Wellness Company, Inc., operates as a health and wellness company, focuses on enhancing the lives of pets, pet parents, and its Petco partners in the United States, Mexico, and Puerto Rico. The company provides veterinary care, grooming, training, tele-health, and Vital Care and pet health insurance services, as well as veterinary services through Vetco mobile clinics. It also offers pet consumables, supplies, and services through its petco.com, petcoach.co, petinsurancequotes.com, and pupbox.com websites. The company offers its products under the WholeHearted, Reddy, and Well & Good brands. Petco Health and Wellness Company, Inc. was founded in 1965 and is headquartered in San Diego, California.