Tractor Supply NASDAQ:TSCO disappointed investors in Q1 2026 and now investors are wondering if its growth has permanently slowed down. This store reported 0.5% same-store sales growth for the quarter and maintained its guidance for 1% to 3% growth for the full year. Even if the company hits its target for 2026, this is a lower growth rate than analysts expected. On the Q1 2026 earnings call, available at Yahoo! Finance, an analyst asked Tractor Supply's CEO if investors should still expect comps in the 3% to 5% range. The CEO affirmed the company's 2026 guidance but wouldn't provide guidance for future years, although that's normal. So, if Tractor Supply can do better in 2027, this could be a buying opportunity. Otherwise, it might continue to trade at a lower multiple.

Tractor Supply Now Has a Smaller Growth Premium

Right now, Tractor Supply is guiding for 2% comps at the midpoint and it will also receive about a 4% uplift from new stores. Since it had 2,395 stores at the end of 2025 and plans to add around 100 stores this year, its store count will rise by around 4.2% in 2026. If you add 2% comps growth to 4.2% location growth, 6% revenue growth would be achievable for Tractor Supply, which is the high end of its guidance.

Meanwhile, Tractor Supply also guided for 2026 EPS of $2.18 at the midpoint. On June 11, its closing price was $31.26, so it's trading at a FY2026 P/E of 14. That's a premium, but it isn't a large one, and this stock has traded at much higher multiples before. A year ago, Tractor Supply was trading at a forward P/E of 25. So, some investors might think this is a good time to buy a fallen growth stock. Tractor Supply was able to maintain higher growth rates in the past because its store placement strategy protected it from competition, but that moat might not protect it from all of its competitors now.

The Pet Business Is The Problem

On the call, Tractor Supply CEO Hal Lawton explained that all of the company's departments met expectations except for the companion animal business. Farmers and ranchers are still buying feed from the store, but it's underperforming with dog owners. Consumers might not be buying less dog food, though. Industry statistics suggest that the pet industry is still growing. In March, the American Pet Product Association released a report on pet industry spending in 2025. This organization reported that pet industry revenue was up 3.7% in 2025 and is expected to rise 4.4% to $165 billion in 2026.

So, Tractor Supply might have lost market share to companies that sell dog food online, such as Chewy (CHWY). It's possible that dog owners would prefer to subscribe to a pet food delivery service so they don't have to pick up pet food at the store. And it could be hard for Tractor Supply to defend its market share if it is losing business to online pet stores. Tractor Supply's moat is based on economies of scale that give it advantages over independent feed stores in rural areas. It also sells a lot of farm supplies that aren't available at other stores.

Additionally, Tractor Supply can also sell dog and cat food in rural areas where other pet stores don't operate. But that doesn't protect it from companies that can ship pet food to your door. And online pet stores can also ship other pet products, such as fresh pet food or pet medication, as well. So, Tractor Supply's moat has a hole in it, and that explains why most of its departments are performing well but its dog business isn't meeting expectations.

This Year Could Be Tougher Than Management Expects

It looks like analysts might not trust Tractor Supply's guidance now. According to Yahoo! Finance, the average 2026 revenue estimate for Tractor Supply is $16.22 billion, which would be 4.5% revenue growth in comparison to 2025. Since Tractor Supply expects to increase its location count by around 4% this year, that means analysts expect it to report same-store sales growth that's similar to what it posted in the first quarter. So, analysts expect around 0.5% same-store sales growth even though the company guided for 2% growth.

Tractor Supply reported 1.2% same-store sales growth for the full year of 2025 and it reported 0.3% same-store sales growth in Q4 2025, which might help explain why analysts have lower expectations now. Additionally, these revenue growth expectations also affect earnings estimates for Tractor Supply. Tractor Supply's operating margin was 9.47% in 2025 and the midpoint of its guidance for 2026 is 9.45%. So, it's guiding for relatively stable margins, but it might need 2% comps to maintain its margins. If it posts weak comps like analysts expect, deleverage on fixed costs will reduce its margins.

The VIP Petcare Purchase Might Not Have a Major Impact Immediately

After the Q1 2026 report, Tractor Supply bought VIP Petcare, a mobile pet care service provider. Tractor Supply was VIP Petcare's largest customer before this acquisition, but VIP Petcare also provides its services to other pet stores such as Pet Supply Plus. This deal will add some incremental revenue for Tractor Supply. RocketReach estimates that VIP Petcare generates $138 million per year in revenue, which is about 0.85% of Tractor Supply's expected revenue for 2026. But Tractor Supply did not update its guidance after the acquisition, and analysts didn't change their revenue estimates either. Analysts expected the company to post $16.22 billion in revenue for 2026 before the acquisition, and they still expect that now. In the long term, Tractor Supply plans to use its pet care business as a growth driver, but it also has other long-term growth initiatives as well.

Tractor Supply Still Has Other Long-Term Growth Initiatives

While it might be hard for Tractor Supply to improve its pet food business in the short term, the company has other growth initiatives that could make up for that. Tractor Supply is building a network of Final Mile delivery hubs that can deliver farm supplies to its customers. As Retail Wire explains, traditional delivery services are not designed to transport large and bulky products like lawnmowers and stoves. Products like fences and chicken coops also aren't going to fit into a gig worker's car. Tractor Supply's employees are also familiar with farm equipment, unlike other stores' delivery drivers.

So, Tractor Supply will be able to use its delivery service to increase the range of its existing rural stores and it will continue to capture market share from other rural feed stores. Meanwhile, other online marketplace platforms won't be able to ship larger products to these markets because they won't have local delivery hubs. Tractor Supply did report double-digit digital sales growth in Q1 2026, so it sounds like its expanded delivery hub network is already producing results.

Tractor Supply has also been localizing its stores and remodeling them through its Project Fusion initiative. It sounds like this is also a longer-term project that might not pay off immediately. The company is adding specialized departments for pet care services, work wear, and garden supplies to its existing stores. These initiatives could make Tractor Supply more relevant to customers in suburban areas who are visiting the store because of its lifestyle products and don't own commercial farms or ranches themselves. Many retailers report higher comps from remodeled stores, so Project Fusion should also increase comps.

Conclusion

Tractor Supply could still be a growth stock, even if its pet food business remains relatively weak, because its other growth initiatives could counteract this effect. For example, if its pet food business reduced its comps by 1% in 2026, but its other businesses generated a 3% uplift, that would still add up to 2% growth. It sounds like that's what Tractor Supply currently expects to happen in 2026, although analysts have lower short-term expectations. And the VIP Petcare purchase could help Tractor Supply achieve its short-term goal.

In the longer term, Tractor Supply expects stronger growth because of its expanded delivery hub network and increased digital sales. It also expects additional revenue from pet care services. So, I'd expect the uplift from Tractor Supply's other businesses to rise in upcoming years. A 4% uplift from these businesses and a 1% drag from pet food still adds up to 3% comps growth. Additionally, Tractor Supply has been increasing its store count by 4% per year, and that adds another 4% uplift. And Tractor Supply did report double-digit digital sales growth in Q1 2026, so there is some evidence that its other growth initiatives are working. So, it sounds like this company might be able to maintain 7% revenue growth in the future, and analysts may be underestimating its long-term growth potential.