LSE:TSCO

Stock Analysis Report

Executive Summary

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


Snowflake Analysis

Fair value with acceptable track record.


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 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

1.1%

TSCO

1.6%

GB Consumer Retailing

0.05%

GB Market


1 Year Return

12.7%

TSCO

6.0%

GB Consumer Retailing

7.1%

GB Market

Return vs Industry: TSCO exceeded the UK Consumer Retailing industry which returned 6% over the past year.

Return vs Market: TSCO exceeded the UK Market which returned 6.6% over the past year.


Shareholder returns

TSCOIndustryMarket
7 Day1.1%1.6%0.05%
30 Day4.2%2.4%-1.7%
90 Day9.6%4.4%4.1%
1 Year16.0%12.7%10.2%6.0%12.6%7.1%
3 Year39.9%33.1%12.8%4.5%18.4%3.6%
5 Year8.9%3.6%14.5%4.2%35.2%4.2%

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?

33.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: TSCO (£2.55) is trading below our estimate of fair value (£3.82)

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


Price To Earnings Ratio

PE vs Industry: TSCO is good value based on its PE Ratio (18.9x) compared to the Consumer Retailing industry average (21.1x).

PE vs Market: TSCO is poor value based on its PE Ratio (18.9x) compared to the UK market (18.6x).


Price to Earnings Growth Ratio

PEG Ratio: TSCO is poor value based on its PEG Ratio (1.5x)


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 (1.3x).


Next Steps

Future Growth

How is Tesco forecast to perform in the next 1 to 3 years based on estimates from 15 analysts?

12.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: TSCO's forecast earnings growth (12.8% per year) is above the savings rate (0.5%).

Earnings vs Market: TSCO's earnings (12.8% per year) are forecast to grow slower than the UK market (13.1% 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 (3.5% 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 (11.3%).


Next Steps

Past Performance

How has Tesco performed over the past 5 years?

67.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: TSCO has a large one-off loss of £495.0M impacting its August 24 2019 financial results.

Growing Profit Margin: TSCO's current net profit margins (2%) are higher than last year (1.5%).


Past Earnings Growth Analysis

Earnings Trend: TSCO has become profitable over the past 5 years, growing earnings by 67.4% per year.

Accelerating Growth: TSCO's earnings growth over the past year (43.5%) is below its 5-year average (67.4% per year).

Earnings vs Industry: TSCO earnings growth over the past year (43.5%) exceeded the Consumer Retailing industry -4.2%.


Return on Equity

High ROE: TSCO's Return on Equity (9.4%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Tesco's financial position?


Financial Position Analysis

Short Term Liabilities: TSCO's short term assets (£16.4B) do not cover its short term liabilities (£20.6B).

Long Term Liabilities: TSCO's short term assets (£16.4B) do not cover its long term liabilities (£22.6B).


Debt to Equity History and Analysis

Debt Level: TSCO's debt to equity ratio (49.5%) is considered high.

Reducing Debt: TSCO's debt to equity ratio has reduced from 102.9% to 49.5% over the past 5 years.


Balance Sheet

Inventory Level: TSCO has a high level of physical assets or inventory.

Debt Coverage by Assets: TSCO's debt is covered by short term assets (assets are 2.4x debt).


Cash Runway Analysis

For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.

Stable Cash Runway: TSCO is profitable, therefore cash runway is not a concern.

Forecast Cash Runway: TSCO is profitable, therefore cash runway is not a concern.


Next Steps

Dividend

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

2.26%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: TSCO's dividend (2.26%) is higher than the bottom 25% of dividend payers in the UK market (1.81%).

High Dividend: TSCO's dividend (2.26%) is low compared to the top 25% of dividend payers in the UK market (5.12%).


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 reasonable payout ratio (50.1%), TSCO's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: TSCO's dividends in 3 years are forecast to be covered by earnings (60.5% payout ratio).


Next Steps

Management

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

1.7yrs

Average management tenure


CEO

Dave Lewis (54yo)

5.4yrs

Tenure

UK£4,600,000

Compensation

Mr. David Lewis, also known as Dave, has been the Group Chief Executive Officer and Executive Director at Tesco PLC since September 01, 2014. Mr. Lewis served as the President of Personal Care for Skin, De ...


CEO Compensation Analysis

Compensation vs Market: Dave's total compensation ($USD5.92M) is about average for companies of similar size in the UK market ($USD4.67M).

Compensation vs Earnings: Dave's compensation has been consistent with company performance over the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Dave Lewis
Group Chief Executive & Executive Director5.4yrsUK£4.60m0.0018% £441.7k
Alan James Stewart
CFO & Executive Director5.4yrsUK£2.56m0.0012% £307.7k
Charles Wilson
Chief Executive Officer of Booker1.6yrsUK£835.40k1.18% £293.6m
Tony Hoggett
Chief Operating Officer1.7yrsno datano data
Guus Dekkers
Chief Technology Officer1.8yrsno datano data
Adrian Morris
Group General Counsel7.4yrsno datano data
Christine Heffernan
Group Communications Director0.9yrsno datano data
Natasha Adams
Chief People Officer1.7yrsno datano data
Sarah Fitzgerald
Head of Buying0yrsno datano data
Andrew Yaxley
Group Chief Product Officer1.6yrsno datano data

1.7yrs

Average Tenure

54yo

Average Age

Experienced Management: TSCO's management team is not considered experienced ( 1.7 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Dave Lewis
Group Chief Executive & Executive Director5.4yrsUK£4.60m0.0018% £441.7k
Alan James Stewart
CFO & Executive Director5.4yrsUK£2.56m0.0012% £307.7k
Deanna Oppenheimer
Senior Independent Director3.1yrsUK£174.00k0.0023% £580.7k
Mark Armour
Independent Non-Executive Director6.4yrsUK£86.00k0.00051% £126.6k
Byron Grote
Independent Non-Executive Director4.8yrsUK£129.00k0.0058% £1.4m
John Allan
Non-Executive Chairman4.9yrsUK£663.00k0.0031% £779.2k
Stephen Golsby
Independent Non-Executive Director3.3yrsUK£112.00k0.00043% £106.7k
Simon Patterson
Independent Non-Executive Director3.8yrsUK£86.00k0.0010% £255.6k
Alison Platt
Independent Non-Executive Director3.8yrsUK£86.50k0.00036% £89.3k
A. B. Olsson
Independent Non-Executive Director5.3yrsUK£103.00k0.00048% £119.1k

4.8yrs

Average Tenure

61.5yo

Average Age

Experienced Board: TSCO's board of directors are considered experienced (4.8 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 been diluted in the past year, with total shares outstanding growing by 8.8%.


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£24.816b
  • Shares outstanding: 9.74b
  • Website: https://www.tescoplc.com

Number of Employees


Location

  • Tesco PLC
  • Tesco House
  • Shire Park
  • Welwyn Garden City
  • 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)SPONSORED ADRUSUSDJan 1980
TCO1DB (Deutsche Boerse AG)SPONSORED ADRDEEURJan 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 provides retail banking and insurance services. The company has operations in the United Kingdom, the Republic of Ireland, the Czech Republic, Hungary, Poland, Slovakia, Malaysia, and Thailand. The company serves its customers through approximately 6,800 stores, as well as online. Tesco PLC was founded in 1919 and is headquartered in Welwyn Garden City, the United Kingdom. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/20 20:40
End of Day Share Price2020/02/20 00:00
Earnings2019/08/24
Annual Earnings2019/02/23


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.