The company reported a net income of $64.77 million, or 46 cents diluted earnings per share, for the third quarter of 2013 ending September 28. That's up from a net income of $50.02 million, or 35 cents diluted earnings per share for the same quarter last year. Revenues for the third quarter were $1,208 million, up from $1,066 million for the same quarter last year. Moreover, the comparable store sales were up by 7.5% year on year. The increase was due to strong results in key consumables – usable and edible products as well as to strong results in seasonal merchandise. Also beneficial to the growth was the extended spring selling season resulting from mild temperatures. The company opened 23 new stores, and closed 1, compared to 17 store openings and 1 closure in the same quarter last year. Gross profit margin for the quarter was 34.41%, up from 33.52 for the same quarter last year, mainly due to strong sell-through of spring seasonal products, resulting in fewer markdowns. Operating income margin was 8.42% which is up from 7.3% recorded in the third quarter of 2012, primarily due to strong comparable store sales growth. Cash flow from operating activities for the first nine months of 2013 was $98.6 million, down from $155.8 million for the same period last year. The company raised its full fiscal year outlook and now expects comparable store sales to increase by 4.2% - 5%, in comparison to previous guidance of 4.0% - 5%. TSCO forecasted fourth quarter of 2013 EPS are expected to be in the range from 63 cents to 67 cents, compared to EPS of 55 cents for the fourth quarter of 2012. The financial strength indicators of the company are all at satisfactory levels. The current ratio of 2.20 is better than the industry average of 1.36. However, the quick ratio of 0.20 is at worse levels than the industry average of 0.99. The interest coverage ratio of 223.99 is much better than the industry average of 20.08. In terms of efficiency, the asset turnover ratio of 2.77 is much better than the industry average of 0.94; however, the inventory turnover ratio of 3.09 is at worse levels than the industry average of 7.75; and the ROE of 27.86% is again much better than the industry average of 13.0%.

VALUATION

TSCO PE stands at 34.88 below the industry average of 44.45, but above the stock market average represented by the S&P 500 average of 18.89. The company is currently trading above the maximum P/E ratio of 15x, and over the last five years, the company’s shares have traded in the range of 13.52x to 34.89x trailing 12-month earnings. TSCO's current Price/Sales of 2.13 is in line with the average of its industry of 2.15. TSCO’s head to head comparison to its main competitors shows that the company has leveled gross margin with its competitors and with the industry average. The operating margin is the in the middle when compared to the main peers, and it is above the industry average. The quarterly revenue growth of the company is the highest when compared to the peers, and also above the industry average. TSCO trades at highest P/E ratio in comparison to the main competitors, and it is the same case with P/S ratio. TSCO’s twelve trailing months EBITDA is $588 million, which is the same with the industry average. The stock is currently trading below its intrinsic value of $97.11, this suggests that the stock is currently undervalued at these levels. The beta of 0.86 implies lower volatility of the stock with respect to the S&P 500. TSCO has shown very favorable earnings consistency over the last five years. Moreover, the company earnings have grown by 25.10% over the last five years. Moreover, the current quarter earnings in comparison to the same quarter last year have grown by 31.43%. The company Total Debt to Equity of 3.48 is below the required maximum, and it is also below the industry average of 39.6. TSCO’s current price levels are below the ma