TSCO

Of course. Here is a comprehensive analysis of TSCO based on the information provided.

**Analysis of TSCO**

Technical & Valuation Outlook: TSCO's stock has been weak, underperforming the market significantly over the past quarter. While it shows lower volatility (a low beta), it is currently stuck in a neutral technical position, down considerably from its high but not at oversold levels. The valuation is a major concern; with a high PE ratio and an extremely elevated EV/EBITDA of 76.1, the stock appears significantly overvalued based on its current earnings and cash flow.

Fundamental Health & Operations: The company's fundamentals are mixed. Profitability remains solid with good gross and net margins, though recent quarters show margin pressure from rising costs. Financially, TSCO is stable with manageable debt and strong interest coverage, but its low cash flow relative to debt is a watchpoint. Operationally, it demonstrates decent efficiency, though inventory management could be improved.

Risk Assessment: The primary risk is its rich valuation, which leaves little room for error. While the stock is less volatile than the market, it still experienced a sharp drawdown over the past year. A positive note is the lack of significant short-selling interest, suggesting professional investors aren't aggressively betting against it.

**Investment Recommendation**

Based on the analysis, a "Hold" rating is recommended. While TSCO is a financially stable company, its current stock price appears to fully reflect its value, if not overvalue it. The high valuation multiples, particularly the EV/EBITDA, pose a significant risk if future growth disappoints. Investors should wait for a more attractive entry point or for clear signs of operational improvement that could justify the premium price.

*Note: This is not investment advice, for reference only.*

RockFlow Model Forecast: Three Scenarios for 2026

Of course. Here is a 12-month outlook for TSCO stock.

Outlook: The 12-month outlook for TSCO is cautious, with the stock likely to underperform the broader market unless it can justify its premium valuation.

Key Catalysts: Positive catalysts would include a significant rebound in earnings growth that validates its high multiples, successful navigation of cost pressures to improve margins, and any strategic announcements that signal a new phase of efficient growth.

Potential Risks: The primary risk is its extreme valuation (EV/EBITDA of 76.1), which leaves the stock highly vulnerable to any earnings disappointment or a broader market shift away from expensive stocks. Continued margin compression from rising costs is a significant near-term threat.

Price Target: Given the lack of a clear analyst target and the concerning valuation, a realistic 12-month price range is $45 - $55, suggesting limited upside from the current price near $51.76 and potential for downside if sentiment sours.

Wall Street Consensus

Most Wall Street analysts are optimistic about TSCO's 12-month outlook, with consensus target around $51.16, indicating expected upside potential.

Overall, TSCO has investment potential but also faces challenges. Here are key factors to weigh before investing.

TSCO has demonstrated weak performance with notable underperformance versus the broader market over recent quarters. The stock has experienced a significant decline from its 52-week high but maintains a position above the midpoint of its yearly range.

Over the past three months, TSCO has declined 4.54%, notably underperforming the market by 7.91%, while showing relative stability over the past month with only a marginal 0.1% decrease. This low-beta characteristic suggests lower volatility compared to the overall market during this period of underperformance.

Currently trading at $51.76, TSCO sits approximately 19% above its 52-week low but remains 19% below its yearly high, indicating a middle-ground position. With a maximum drawdown of -20.46% over the past year, the stock is neither severely oversold nor overbought, hovering in a neutral technical territory.

Revenue & Profitability TSCO's Q3 revenue of $3.72 billion shows a sequential decline from Q2's $4.44 billion, reflecting seasonal patterns typical in this industry. Profitability metrics remain solid with a gross margin of 37.4% and net margin of 7.0%, though operating margins declined from 13.0% in Q2 to 9.2% in Q3 due to higher operating expenses relative to revenue.

Financial Health The company maintains moderate leverage with a debt-to-equity ratio of 2.22 and debt ratio of 0.53, indicating balanced capital structure. Interest coverage remains strong at 23.4x, though the cash flow to debt ratio of 0.05 suggests limited free cash flow generation relative to total debt obligations.

Operational Efficiency TSCO demonstrates satisfactory operational efficiency with ROE of 10.1% and asset turnover of 0.34. Inventory management shows room for improvement with 126 days inventory outstanding, while the cash conversion cycle of 66 days indicates reasonable working capital management efficiency.

Valuation Level: With a trailing PE of 24.75 and a forward PE of 28.9, TSCO appears to be trading at a premium valuation based on earnings. The metrics are further elevated by a high price-to-book ratio of 10.63 and a notably high EV/EBITDA of 76.1, which strongly suggests the stock is overvalued. The negative PEG ratio, while technically indicating potential undervaluation, is unreliable as it likely stems from negative earnings growth expectations rather than a positive signal.

Peer Comparison: A peer comparison cannot be conducted due to the unavailability of industry average data for the relevant valuation metrics. This lack of benchmark information prevents a contextual assessment of whether TSCO's premium multiples are typical for its sector or an outlier. Therefore, a conclusive relative valuation judgment cannot be formed without this comparative data.

Based on the provided metrics, TSCO demonstrates moderate volatility risk. The beta of 0.737 suggests the stock is less volatile than the broader market, typically moving about 26% less than market swings. However, the 1-year maximum drawdown of -20.46% indicates a significant peak-to-trough decline, highlighting that the stock has still experienced substantial price depreciation during recent market stress, which may concern short-term investors.

Regarding other risks, the notable absence of reported short interest is a positive signal, implying that professional investors do not have a significant bearish conviction on the stock's near-term prospects. The primary risk in this category would be liquidity; as a mid-cap stock, TSCO may have lower trading volumes compared to large-cap peers, which could lead to wider bid-ask spreads and potential challenges in executing large orders without impacting the price.