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Tesco PLC TSCO

Morningstar Rating
GBX 317.40 −1.50 (0.47%)
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Company Report

Tesco: Strong Market Share Gains Continue and Guidance Confirmed

Tesco reported a first-quarter trading update that included a 3.4% increase in retail sales. Sales in the United Kingdom and the Republic of Ireland were up 4.6% and 4.4%, respectively, with Booker down 1.3%. Catering sales rose by 2.2%, and retail sales were up 1%. From a channel perspective, digital channel sales increased by 8.9%, driven by volume growth. Tesco achieved strong market share gains in the UK, up 52 basis points year on year to 27.6%, supported by positive switching gains (customers switching from other retailers to Tesco), and in Ireland, up 59 basis points in the first quarter. Booker's performance was not as bad as the headline growth number suggests (overall sales declined 1.3%), given strong performance last year and the continued tobacco market decline.

Price vs Fair Value

TSCO is trading at a 712% premium.
Price
GBX 318.90
Fair Value
GBX 394.00
Uncertainty
Medium
1-Star Price
GBX 763.10
5-Star Price
GBX 684.10
Economic Moat
Hpz
Capital Allocation
Zymqvbgs

Bulls Say, Bears Say

Bulls

As the largest grocer in the U.K. in the online and offline channels with almost 100% coverage and a network of more than 3,500 stores, Tesco should be able to use its scale to drive results in ways subscale peers cannot.

Bears

Tesco's main U.K. and Ireland markets are highly competitive, with hard discounters expanding market share.

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News

Trading Information

Previous Close Price
GBX 318.90
Day Range
GBX 316.40319.90
52-Week Range
GBX 217.53320.30
Bid/Ask
GBX 317.30 / GBX 317.50
Market Cap
GBX 2.18 Tril
Volume/Avg
1.2 Mil / 21.8 Mil

Key Statistics

Price/Earnings (Normalized)
13.39
Price/Sales
0.34
Dividend Yield (Trailing)
3.79%
Dividend Yield (Forward)
3.79%
Total Yield
7.66%

Company Profile

Tesco is one of the largest food retailers in the world, operating thousands of stores in the United Kingdom, Ireland, and Europe. According to Kantar, Tesco is the market leader in the U.K. with a share of more than 27%, roughly double that of Asda or Sainsbury's. Tesco operates a core supermarket business in addition to convenience and neighborhood outlets. With a 35% digital market share in the U.K., the company holds a dominant position online. Tesco gained exposure to the cash-and-carry and out-of-home delivering industries with the landmark GBP 4 billion acquisition of Booker in 2018.
Sector
Consumer Defensive
Industry
Grocery Stores
Stock Style Box
Large Core
Total Number of Employees
336,712

Competitors

Valuation

Metric
TSCO
CA
WMT
Price/Earnings (Normalized)
13.397.3530.15
Price/Book Value
1.900.856.93
Price/Sales
0.340.120.86
Price/Cash Flow
6.402.8616.26
Price/Earnings
TSCO
CA
WMT

Financial Strength

Metric
TSCO
CA
WMT
Quick Ratio
0.300.640.19
Current Ratio
0.810.930.80
Interest Coverage
3.472.6510.38
Quick Ratio
TSCO
CA
WMT

Profitability

Metric
TSCO
CA
WMT
Return on Assets (Normalized)
3.59%2.16%7.77%
Return on Equity (Normalized)
14.01%10.56%24.81%
Return on Invested Capital (Normalized)
7.75%5.64%14.14%
Return on Assets
TSCO
CA
WMT
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