LSE:TSCO

Stock Analysis Report

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Executive Summary

Tesco PLC, together with its subsidiaries, operates as a grocery retailer. More Details


Snowflake Analysis

Slightly overvalued with imperfect balance sheet.


Similar Companies

Share Price & News

How has Tesco's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: TSCO is less volatile than 75% of UK stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: TSCO's weekly volatility (3%) has been stable over the past year.


Market Performance


7 Day Return

-3.6%

TSCO

-2.2%

GB Consumer Retailing

-0.3%

GB Market


1 Year Return

-4.1%

TSCO

-2.1%

GB Consumer Retailing

-11.0%

GB Market

Return vs Industry: TSCO underperformed the UK Consumer Retailing industry which returned -2.3% over the past year.

Return vs Market: TSCO exceeded the UK Market which returned -10% over the past year.


Shareholder returns

TSCOIndustryMarket
7 Day-3.6%-2.2%-0.3%
30 Day8.8%6.2%10.2%
90 Day4.1%3.7%6.4%
1 Year0.1%-4.1%2.3%-2.1%-7.4%-11.0%
3 Year28.0%17.3%12.3%0.9%0.9%-11.5%
5 Year52.4%38.9%38.4%22.1%26.5%-2.5%

Long-Term Price Volatility Vs. Market

How volatile is Tesco's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Tesco undervalued compared to its fair value and its price relative to the market?

41.3%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: TSCO (£2.28) is trading below our estimate of fair value (£3.88)

Significantly Below Fair Value: TSCO is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: TSCO's PE Ratio (21.5x) is in line with the GB Consumer Retailing industry average.

PE vs Market: TSCO is poor value based on its PE Ratio (21.5x) compared to the UK market (20.4x).


Price to Earnings Growth Ratio

PEG Ratio: TSCO is poor value based on its PEG Ratio (1.7x)


Price to Book Ratio

PB vs Industry: TSCO is overvalued based on its PB Ratio (1.8x) compared to the GB Consumer Retailing industry average (1.2x).


Next Steps

Future Growth

How is Tesco forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

13.0%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: TSCO's forecast earnings growth (13% per year) is above the savings rate (1.2%).

Earnings vs Market: TSCO's earnings (13% per year) are forecast to grow slower than the UK market (27.3% per year).

High Growth Earnings: TSCO's earnings are forecast to grow, but not significantly.

Revenue vs Market: TSCO's revenue (1.2% per year) is forecast to grow slower than the UK market (6.7% per year).

High Growth Revenue: TSCO's revenue (1.2% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: TSCO's Return on Equity is forecast to be low in 3 years time (10.2%).


Next Steps

Past Performance

How has Tesco performed over the past 5 years?

64.5%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: TSCO has a large one-off loss of £475.0M impacting its August 29 2020 financial results.

Growing Profit Margin: TSCO's current net profit margins (1.6%) are lower than last year (2%).


Past Earnings Growth Analysis

Earnings Trend: TSCO has become profitable over the past 5 years, growing earnings by 64.5% per year.

Accelerating Growth: TSCO's has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: TSCO had negative earnings growth (-15.5%) over the past year, making it difficult to compare to the Consumer Retailing industry average (-8.7%).


Return on Equity

High ROE: TSCO's Return on Equity (8.5%) is considered low.


Next Steps

Financial Health

How is Tesco's financial position?


Financial Position Analysis

Short Term Liabilities: TSCO's short term assets (£17.0B) do not cover its short term liabilities (£18.5B).

Long Term Liabilities: TSCO's short term assets (£17.0B) do not cover its long term liabilities (£21.5B).


Debt to Equity History and Analysis

Debt Level: TSCO's debt to equity ratio (64.1%) is considered high.

Reducing Debt: TSCO's debt to equity ratio has reduced from 201.5% to 64.1% over the past 5 years.

Debt Coverage: TSCO's debt is not well covered by operating cash flow (4.2%).

Interest Coverage: TSCO's interest payments on its debt are well covered by EBIT (3.9x coverage).


Balance Sheet


Next Steps

Dividend

What is Tesco current dividend yield, its reliability and sustainability?

2.53%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: TSCO's dividend (2.53%) is higher than the bottom 25% of dividend payers in the UK market (1.72%).

High Dividend: TSCO's dividend (2.53%) is low compared to the top 25% of dividend payers in the UK market (4.94%).


Stability and Growth of Payments

Stable Dividend: TSCO's dividend payments have been volatile in the past 10 years.

Growing Dividend: TSCO's dividend payments have fallen over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (91.6%), TSCO's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: TSCO's dividends in 3 years are forecast to be covered by earnings (52.8% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

2.6yrs

Average management tenure


CEO

Ken Murphy (53 yo)

0.083

Tenure

Mr. Ken Murphy has been Group Chief Executive Officer and Executive Director of Tesco PLC since October 1, 2020. Mr. Murphy served as Joint Chief Operating Officer at Boots UK & Ireland. Mr. Murphy has dee...


Leadership Team

NamePositionTenureCompensationOwnership
Alan James Stewart
CFO & Executive Director6.17yrsUK£3.61m0.0013%
£ 282.9k
Ken Murphy
Group CEO & Executive Director0.083yrno datano data
Tony Hoggett
Chief Operating Officer2.42yrsno datano data
Guus Dekkers
Chief Technology Officer2.58yrsno datano data
Adrian Morris
Group General Counsel8.17yrsno datano data
Christine Heffernan
Group Communications Director1.67yrsno datano data
Natasha Adams
Chief People Officer2.42yrsno datano data
Sarah Fitzgerald
Head of Buyingno datano datano data
Andrew Yaxley
Group Chief Product Officer2.33yrsno datano data
Duncan Hoy
Managing Director of Large Stores4.42yrsno datano data
Nick Ashley
Head of Media & Campaign Planning3.83yrsno datano data
Alessandra Bellini
Chief Customer Officer3.67yrsno datano data

2.6yrs

Average Tenure

Experienced Management: TSCO's management team is considered experienced (2.6 years average tenure).


Board Members

NamePositionTenureCompensationOwnership
Alan James Stewart
CFO & Executive Director6.17yrsUK£3.61m0.0013%
£ 282.9k
Ken Murphy
Group CEO & Executive Director0.083yrno datano data
Deanna Oppenheimer
Senior Independent Director3.83yrsUK£153.00k0.0024%
£ 536.8k
Mark Armour
Independent Non-Executive Director7.17yrsUK£92.00k0.00051%
£ 113.6k
Byron Grote
Independent Non-Executive Director5.5yrsUK£135.00k0.0061%
£ 1.4m
John Allan
Non-Executive Chairman5.67yrsUK£690.00k0.0034%
£ 768.4k
Stephen Golsby
Independent Non-Executive Director4.08yrsUK£138.00k0.00043%
£ 95.8k
Simon Patterson
Independent Non-Executive Director4.58yrsUK£90.50k0.0018%
£ 389.8k
Stewart Gilliland
Independent Non-Executive Director2.67yrsUK£103.00k0.00047%
£ 104.7k
Lindsey Pownall
Independent Non-Executive Director4.58yrsUK£115.00k0.00072%
£ 160.4k
Alison Platt
Independent Non-Executive Director4.58yrsUK£101.50k0.00036%
£ 80.2k
A. B. Olsson
Independent Non-Executive Director6yrsUK£105.00k0.00048%
£ 106.9k

4.6yrs

Average Tenure

62.5yo

Average Age

Experienced Board: TSCO's board of directors are considered experienced (4.6 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: TSCO insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Tesco PLC's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Tesco PLC
  • Ticker: TSCO
  • Exchange: LSE
  • Founded: 1919
  • Industry: Food Retail
  • Sector: Consumer Retailing
  • Market Cap: UK£22.272b
  • Shares outstanding: 9.73b
  • Website: https://www.tescoplc.com

Number of Employees


Location

  • Tesco PLC
  • Tesco House
  • Shire Park
  • Welwyn Garden City
  • Herefordshire
  • AL7 1GA
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
TSCD.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1975
TSCOLSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1975
TCODB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1975
TSCOLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1975
TCOXTRA (XETRA Trading Platform)YesOrdinary SharesDEEURJan 1975
TSCO NBMV (Bolsa Mexicana de Valores)YesOrdinary SharesMXMXNJan 1975
TSCOSWX (SIX Swiss Exchange)YesOrdinary SharesCHCHFJan 1975
TSCD.YOTCPK (Pink Sheets LLC)ADR EACH CNV INTO 3 ORD (GBP)USUSDJan 1980
TCO1DB (Deutsche Boerse AG)ADR EACH CNV INTO 3 ORD (GBP)DEEURJan 1980

Biography

Tesco PLC, together with its subsidiaries, operates as a grocery retailer. The company operates through convenience and hypermarket store formats, as well as engages in the wholesale business. It also prov...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/11/26 18:43
End of Day Share Price2020/11/26 00:00
Earnings2020/08/29
Annual Earnings2020/02/29


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.