Tractor Supply vs Best Buy: Which Stock Shows Stronger Potential?

Home > Comparison > Consumer Cyclical > TSCO vs BBY

The strategic rivalry between Tractor Supply Company and Best Buy Co., Inc. shapes the competitive landscape of the specialty retail sector. Tractor Supply operates as a rural lifestyle retailer with a broad product mix serving recreational farmers and ranchers. Best Buy focuses on technology retail and related services across North America. This analysis pits Tractor Supply’s asset-heavy model against Best Buy’s tech-driven approach to identify the superior risk-adjusted investment opportunity for a diversified portfolio.

Table of contents

• Companies Overview
• Income Statement Comparison
• Financial Ratios Comparison
• How are the two companies positioned?
• Which stock offers better returns?
• How do institutions grade them?
• Risks specific to each company
• Final Verdict: Which stock to choose?

Companies Overview

Tractor Supply Company and Best Buy Co., Inc. dominate distinct specialty retail segments in the U.S. market.

Tractor Supply Company: Leading Rural Lifestyle Retailer

Tractor Supply Company commands the rural lifestyle retail niche with a focus on equine, livestock, and pet products. It generates revenue by selling essential health and maintenance goods across 2,016 stores and online platforms. In 2022, it emphasized expanding its footprint and enhancing product variety to serve recreational farmers and ranchers more effectively.

Best Buy Co., Inc.: Specialty Technology Retail Powerhouse

Best Buy Co. stands as a major technology and consumer electronics retailer in the U.S. and Canada. Its earnings stem from a broad portfolio including computing devices, appliances, and entertainment products, supported by value-added services like installation and repair. The 2022 strategy centered on diversifying services and strengthening its omnichannel presence to meet evolving consumer tech demands.

Strategic Collision: Similarities & Divergences

Both companies excel in specialty retail, but Tractor Supply focuses on rural essentials while Best Buy targets tech-savvy consumers. Their primary battleground lies in customer loyalty through tailored offerings and service innovation. Tractor Supply’s steady rural base contrasts with Best Buy’s higher volatility tech market, presenting distinct investment profiles defined by sector cyclicality and growth potential.

Income Statement Comparison

This data dissects the core profitability and scalability of both corporate engines to reveal who dominates the bottom line:

Metric	Tractor Supply Company (TSCO)	Best Buy Co., Inc. (BBY)
Revenue	15.5B	41.5B
Cost of Revenue	10.4B	32.1B
Operating Expenses	3.7B	7.6B
Gross Profit	5.2B	9.4B
EBITDA	2.0B	2.2B
EBIT	1.5B	1.3B
Interest Expense	69M	51M
Net Income	1.1B	927M
EPS	2.07	4.31
Fiscal Year	2025	2025

Income Statement Analysis: The Bottom-Line Duel

This income statement comparison reveals the true operational efficiency and profitability momentum of two distinct retail giants.

Tractor Supply Company Analysis

Tractor Supply shows steady revenue growth, reaching $15.5B in 2025, up 22% since 2021. Net income climbs to $1.1B, reflecting a solid 7.06% net margin, which remains favorable despite a slight dip in gross profit last year. EBIT margin holds stable near 9.5%, underscoring effective cost control and consistent operational efficiency.

Best Buy Co., Inc. Analysis

Best Buy’s revenue contracts to $41.5B in 2025, down over 12% since 2021, with net income shrinking sharply to $927M. Margins show weakness: gross margin at 22.6% and net margin at 2.23%, both under pressure. EBIT margin deteriorates to 3.24%, signaling declining operational leverage amid negative earnings per share growth.

Margin Resilience vs. Revenue Decline

Tractor Supply demonstrates superior margin health and revenue expansion, with net income growing nearly 10% over five years. Best Buy struggles with shrinking top-line and eroding profitability. For investors prioritizing consistent earnings and margin durability, Tractor Supply’s profile offers a clearer fundamental advantage over Best Buy’s challenged performance.

Financial Ratios Comparison

These vital ratios act as a diagnostic tool to expose the underlying fiscal health, valuation premiums, and capital efficiency of each company:

Ratios	Tractor Supply Company (TSCO)	Best Buy Co., Inc. (BBY)
ROE	42.5%	33.0%
ROIC	13.1%	16.6%
P/E	24.2	19.9
P/B	10.3	6.6
Current Ratio	1.34	1.03
Quick Ratio	0.16	0.39
D/E	3.73	1.44
Debt-to-Assets	88.1%	27.4%
Interest Coverage	21.2	33.7
Asset Turnover	1.42	2.81
Fixed Asset Turnover	2.23	8.38
Payout ratio	44.5%	87.1%
Dividend yield	1.84%	4.37%
Fiscal Year	2025	2025

Efficiency & Valuation Duel: The Vital Signs

Financial ratios serve as a company’s DNA, exposing hidden risks and operational strengths through clear, quantifiable signals.

Tractor Supply Company

TSCO demonstrates a robust 42.46% ROE, signaling strong profitability, while its net margin of 7.06% is neutral. The P/E at 24.18 suggests a fairly valued stock, though a high PB of 10.27 appears stretched. Shareholders receive a modest 1.84% dividend yield, balancing returns with reinvestment in operational efficiency.

Best Buy Co., Inc.

BBY posts a solid 33.01% ROE but suffers from a low 2.23% net margin, reflecting pressure on profitability. Its P/E of 19.93 looks reasonable, with a lower PB of 6.58 still unfavorable. The company rewards investors with a 4.37% dividend yield, showcasing a shareholder-friendly return policy despite margin constraints.

Valuation Balance vs. Profitability Strength

TSCO offers a superior profitability profile with high ROE and operational returns but trades at a stretched book value. BBY provides a more attractive dividend yield and efficient asset use but with weaker margins. TSCO fits investors prioritizing earnings power, while BBY suits those seeking income and asset efficiency.

Which one offers the Superior Shareholder Reward?

I compare Tractor Supply Company (TSCO) and Best Buy Co., Inc. (BBY) on dividends, payout ratios, and buybacks for 2026 shareholder value. TSCO yields ~1.8% with a manageable 44% payout, supported by steady free cash flow (~1.4/share). It pairs dividends with moderate buybacks, balancing income and capital return sustainably. BBY offers a higher dividend yield near 4.4% but pays out ~87% of earnings, pressuring cash flow despite stronger free cash flow (~6.5/share). BBY’s aggressive buyback program amplifies returns but risks sustainability if earnings falter. I find TSCO’s balanced distribution model more durable and attractive for long-term total return in 2026, while BBY’s yield and buybacks may appeal more to income seekers willing to accept elevated risk.

Comparative Score Analysis: The Strategic Profile

The radar chart reveals the fundamental DNA and strategic trade-offs of Tractor Supply Company and Best Buy Co., Inc.:

Best Buy delivers a more balanced financial profile with strong ROE (5) and decent ROA (3) scores, signaling operational efficiency. Tractor Supply relies mainly on a moderate discounted cash flow score (3) but suffers across profitability, leverage, and valuation metrics (all scoring 1). Best Buy’s strength in equity returns contrasts sharply with Tractor Supply’s broad financial weaknesses, highlighting Best Buy’s superior capital allocation and market positioning.

Bankruptcy Risk: Solvency Showdown

Best Buy’s Altman Z-Score of 3.49 versus Tractor Supply’s 4.85 suggests both firms currently reside in the safe zone; however, Tractor Supply enjoys a wider margin of safety:

This gap signals Tractor Supply’s stronger buffer against financial distress in volatile market cycles, whereas Best Buy, though stable, faces relatively higher vulnerability to economic downturns.

Financial Health: Quality of Operations

Best Buy’s Piotroski F-Score of 7 outperforms Tractor Supply’s 5, indicating superior financial health and operational quality:

Best Buy’s stronger internal metrics reflect robust profitability and efficient asset use. Tractor Supply’s moderate score raises caution, suggesting potential red flags in earnings quality or liquidity that investors should monitor closely.

How are the two companies positioned?

This section dissects the operational DNA of TSCO and BBY by comparing their revenue distribution and internal strengths and weaknesses. The goal is to confront their economic moats and identify which model offers the most resilient competitive advantage today.

Revenue Segmentation: The Strategic Mix

This visual comparison dissects how Tractor Supply Company and Best Buy Co., Inc. diversify their income streams and reveals their primary sector bets:

Tractor Supply anchors revenue in Truck, Tool & Hardware at $3.87B, with Livestock and Pet close at $3.72B, showing moderate diversification. Best Buy pivots heavily on Computing and Mobile Phones at $18.7B, dwarfing Appliances at $4.91B. Best Buy’s concentration in tech segments suggests vulnerability to consumer electronics cycles. Tractor Supply’s mix reflects a balanced rural ecosystem approach, reducing concentration risk but relying on hardware and pet supplies.

Strengths and Weaknesses Comparison

This table compares the Strengths and Weaknesses of Tractor Supply Company (TSCO) and Best Buy Co., Inc. (BBY):

Both companies show slightly favorable financial profiles but face distinct challenges. TSCO’s high leverage and liquidity risks contrast with BBY’s lower profitability but stronger asset efficiency and global diversification. These factors shape each firm’s strategic focus on managing financial risk and leveraging market presence.

The Moat Duel: Analyzing Competitive Defensibility

A structural moat is the only reliable shield protecting long-term profits from relentless competitive erosion. Let’s dissect these companies’ moats carefully:

Tractor Supply Company: Deep Customer Loyalty and Cost Advantage

Tractor Supply’s moat stems from strong switching costs and a niche focus on rural lifestyle retail. Its steady 7%+ ROIC over WACC signals value creation despite a slight profitability decline. Expansion into pet specialty markets could deepen this advantage in 2026.

Best Buy Co., Inc.: Ecosystem Lock-In with Service Differentiation

Best Buy leverages its integrated service offerings and brand reputation as its moat, contrasting Tractor Supply’s niche focus. Its ROIC also exceeds WACC, but margins and revenue have contracted, reflecting pressure. Innovations in health tech and smart home solutions offer future growth avenues.

Retail Moats Face Off: Niche Loyalty vs. Service Ecosystem

Both firms create value above capital costs but face declining profitability trends. Tractor Supply’s focused rural niche yields a wider moat, while Best Buy’s ecosystem lock-in is narrower but evolving. Tractor Supply stands better positioned to defend market share amid retail headwinds.

Which stock offers better returns?

The past 12 months reveal contrasting price dynamics for Tractor Supply Company and Best Buy Co., Inc., with TSCO showing modest gains and BBY experiencing pronounced declines, both marked by recent downward momentum.

Trend Comparison

Tractor Supply Company’s stock increased 1.56% over the past year, indicating a bullish but decelerating trend. Its price ranged between 48.4 and 61.76, with moderate volatility (3.0 std deviation).

Best Buy Co., Inc. posted a -17.15% decline in the same period, reflecting a bearish and decelerating trend. Price fluctuated widely from 60.43 to 102.26, with high volatility (9.8 std deviation).

TSCO outperformed BBY over the last 12 months, delivering positive returns versus BBY’s significant losses, despite both stocks showing recent downward trends.

Target Prices

Analysts present a cautiously optimistic consensus for Tractor Supply Company and Best Buy Co., Inc.

Company	Target Low	Target High	Consensus
Tractor Supply Company	50	67	59
Best Buy Co., Inc.	73	96	81.71

The consensus target for Tractor Supply Company suggests modest upside from its current price of $50.88. Best Buy’s target prices imply significant potential appreciation against its $65.10 market price.

How do institutions grade them?

Tractor Supply Company Grades

Here are the latest institutional grades for Tractor Supply Company from leading firms:

Grading Company	Action	New Grade	Date
DA Davidson	Maintain	Buy	2026-01-30
Telsey Advisory Group	Maintain	Outperform	2026-01-30
Goldman Sachs	Maintain	Buy	2026-01-30
TD Cowen	Maintain	Hold	2026-01-30
JP Morgan	Maintain	Neutral	2026-01-30
Morgan Stanley	Maintain	Equal Weight	2026-01-30
Piper Sandler	Maintain	Overweight	2026-01-30
Mizuho	Maintain	Outperform	2026-01-30
Jefferies	Maintain	Buy	2026-01-30
Telsey Advisory Group	Maintain	Outperform	2026-01-29

Best Buy Co., Inc. Grades

Institutional grades for Best Buy Co., Inc. from credible sources are as follows:

Grading Company	Action	New Grade	Date
Truist Securities	Maintain	Hold	2026-01-16
Morgan Stanley	Maintain	Equal Weight	2026-01-15
Barclays	Maintain	Equal Weight	2026-01-08
Evercore ISI Group	Maintain	In Line	2025-12-09
Barclays	Maintain	Equal Weight	2025-11-26
Guggenheim	Maintain	Buy	2025-11-26
Morgan Stanley	Maintain	Equal Weight	2025-11-26
Telsey Advisory Group	Maintain	Outperform	2025-11-26
UBS	Maintain	Buy	2025-11-26
Truist Securities	Maintain	Hold	2025-11-26

Which company has the best grades?

Tractor Supply Company holds stronger grades overall, with multiple “Buy” and “Outperform” ratings from top firms. Best Buy’s grades skew more conservative, mostly “Equal Weight” and “Hold.” This divergence may influence investors favoring growth potential or stability.

Risks specific to each company

The following categories identify the critical pressure points and systemic threats facing both firms in the 2026 market environment:

1. Market & Competition

2. Capital Structure & Debt

3. Stock Volatility

4. Regulatory & Legal

5. Supply Chain & Operations

6. ESG & Climate Transition

7. Geopolitical Exposure

Which company shows a better risk-adjusted profile?

Tractor Supply’s most significant risk is its heavy leverage, which threatens financial flexibility. Best Buy’s greatest risk lies in volatile stock price and supply chain complexity. I see Best Buy offering a better risk-adjusted profile due to stronger operational metrics, a safer Altman Z-score zone, and superior asset turnover despite stock volatility. Recent data show Tractor Supply’s debt-to-assets ratio is alarmingly high at 88%, sharply contrasting with Best Buy’s more conservative 27%. This debt burden justifies caution despite Tractor Supply’s lower stock volatility.

Final Verdict: Which stock to choose?

Tractor Supply Company’s superpower lies in its robust capital efficiency and strong return on equity, signaling disciplined management and value creation. However, its high leverage and weak liquidity ratios warrant caution. It fits well in portfolios seeking aggressive growth with a tolerance for financial risk.

Best Buy leverages a strategic moat rooted in efficient asset use and superior free cash flow yield, offering a safer financial profile than Tractor Supply. Its recurring operational strength and dividend appeal suit investors favoring growth at a reasonable price with moderate risk exposure.

If you prioritize aggressive growth and can absorb balance sheet risks, Tractor Supply outshines with higher profitability and value creation. However, if you seek better financial stability and reliable cash flow, Best Buy offers superior safety and income potential despite recent earnings headwinds.

Disclaimer: Investment carries a risk of loss of initial capital. The past performance is not a reliable indicator of future results. Be sure to understand risks before making an investment decision.

Go Further

I encourage you to read the complete analyses of Tractor Supply Company and Best Buy Co., Inc. to enhance your investment decisions:

• Tractor Supply Company Analysis
• Best Buy Co., Inc. Analysis