LSE:TSCO

Stock Analysis Report

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Market Cap

UK£17.9b

Last Updated

2021/07/30 19:18 UTC

Data Sources

Company Financials +

Executive Summary

Tesco PLC, together with its subsidiaries, engages in retailing and retail banking activities. More Details


Snowflake Analysis

Fair value with limited growth.


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 +/- 2% a week.

Volatility Over Time: TSCO's weekly volatility (2%) has been stable over the past year.


Market Performance


7 Day Return

-0.6%

TSCO

0.4%

GB Consumer Retailing

0.3%

GB Market


1 Year Return

-15.3%

TSCO

0.9%

GB Consumer Retailing

22.4%

GB Market

Return vs Industry: TSCO underperformed the UK Consumer Retailing industry which returned 0.4% over the past year.

Return vs Market: TSCO underperformed the UK Market which returned 21.7% over the past year.


Shareholder returns

TSCOIndustryMarket
7 Day-0.6%0.4%0.3%
30 Day4.5%2.6%0.3%
90 Day5.4%13.2%1.5%
1 Year11.9%-15.3%20.4%0.9%27.9%22.4%
3 Year-0.1%-29.1%6.8%-16.5%12.7%-0.1%
5 Year69.7%18.8%55.0%19.7%39.4%12.6%

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?

38.5%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: TSCO (£2.33) is trading below our estimate of fair value (£3.79)

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


Price To Earnings Ratio

PE vs Industry: TSCO is poor value based on its PE Ratio (24.7x) compared to the UK Consumer Retailing industry average (22.5x).

PE vs Market: TSCO is poor value based on its PE Ratio (24.7x) compared to the UK market (23.9x).


Price to Earnings Growth Ratio

PEG Ratio: TSCO is poor value based on its PEG Ratio (1.4x)


Price to Book Ratio

PB vs Industry: TSCO is good value based on its PB Ratio (1.4x) compared to the GB Consumer Retailing industry average (1.8x).


Future Growth

How is Tesco forecast to perform in the next 1 to 3 years based on estimates from 16 analysts?

17.5%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: TSCO's forecast earnings growth (17.5% per year) is above the savings rate (0.9%).

Earnings vs Market: TSCO's earnings (17.5% per year) are forecast to grow faster than the UK market (15.9% per year).

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

Revenue vs Market: TSCO's revenue (1.7% per year) is forecast to grow slower than the UK market (4.9% per year).

High Growth Revenue: TSCO's revenue (1.7% 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%).


Past Performance

How has Tesco performed over the past 5 years?

24.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: TSCO has a large one-off loss of £573.0M impacting its February 27 2021 financial results.

Growing Profit Margin: TSCO's current net profit margins (1.2%) are lower than last year (1.3%).


Past Earnings Growth Analysis

Earnings Trend: TSCO has become profitable over the past 5 years, growing earnings by 24.4% 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 (-2.9%) over the past year, making it difficult to compare to the Consumer Retailing industry average (12%).


Return on Equity

High ROE: TSCO's Return on Equity (5.8%) is considered low.


Financial Health

How is Tesco's financial position?


Financial Position Analysis

Short Term Liabilities: TSCO's short term assets (£10.8B) do not cover its short term liabilities (£16.0B).

Long Term Liabilities: TSCO's short term assets (£10.8B) do not cover its long term liabilities (£17.5B).


Debt to Equity History and Analysis

Debt Level: TSCO's debt to equity ratio (59%) is considered high.

Reducing Debt: TSCO's debt to equity ratio has reduced from 161.9% to 59% over the past 5 years.

Debt Coverage: TSCO's debt is not well covered by operating cash flow (8.3%).

Interest Coverage: TSCO's interest payments on its debt are well covered by EBIT (3.1x coverage).


Balance Sheet


Dividend

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

3.93%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: TSCO's dividend (3.93%) is higher than the bottom 25% of dividend payers in the UK market (1.3%).

High Dividend: TSCO's dividend (3.93%) is low compared to the top 25% of dividend payers in the UK market (3.94%).


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 (122.9%), 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 (50.9% payout ratio).


Next Steps

Management

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

3.3yrs

Average management tenure


CEO

Ken Murphy (54 yo)

0.75

Tenure

UK£1,770,400

Compensation

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...


CEO Compensation Analysis

Compensation vs Market: Ken's total compensation ($USD2.47M) is below average for companies of similar size in the UK market ($USD3.63M).

Compensation vs Earnings: Insufficient data to compare Ken's compensation with company performance.


Leadership Team

Experienced Management: TSCO's management team is considered experienced (3.3 years average tenure).


Board Members

Experienced Board: TSCO's board of directors are considered experienced (3.3 years average tenure).


Ownership

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


Insider Trading Volume

Insider Buying: Insufficient data to determine if 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£17.879b
  • Shares outstanding: 7.67b
  • Website: https://www.tescoplc.com

Number of Employees


Location

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

Listings


Biography

Tesco PLC, together with its subsidiaries, engages in retailing and retail banking activities. It provides food products in stores and online; and operates mobile virtual network. The company is also invol...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/07/30 19:18
End of Day Share Price2021/07/30 00:00
Earnings2021/02/27
Annual Earnings2021/02/27


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.