Tesco Share Discussion Threads

[philanderer] 10/10/2022 10:34

HSBC cuts Tesco price target to 275 (290) pence - 'buy'

[yump] 10/10/2022 09:47

Has it occurred to you that cross-ramping stocks might put people off the very stocks you like the look of. Or are you just a few bricks short ?

[blackhorse23] 10/10/2022 09:35

CURY ( LSE) excellent https://www.proactiveinvestors.co.uk/companies/news/970955/currys-shares-are-valuing-its-market-leading-uk-business-at-zero-says-broker-970955.html

[yump] 07/10/2022 10:28

The whole stock market has changed over the last 20 years. Now you can make very good profits without risking smaller stocks, because even the larger businesses experience crazy swings in share price between overblown and silly cheap. Presumably that's because of algorithmic trading and the "me-too" behaviour of funds, which is often arbitrary. Plus the apparent increase in pi traders, which results in stop-loss selling etc. etc.

Being a pi means you can easily sell or buy near the peaks and troughs. None of the larger businesses are going to grow rapidly, so you'll hardly ever lose out on massive gains after you book a profit.

The trick I reckon is to take plenty of notice of the analysts and commentators, because they get most pessimistic near the bottom and vice-versa.

They are not very original thinkers and most don't want to stick out as being different. So you don't get big buy recommendations near the bottom and you don't get big sell recommendations near the top.

You do need however, some appreciation of whether a business is actually sound or not - that's the tricky bit. I had some Carillion once and forgot to look at the margins and the cash flow ! Similarly the movement to online destroyed a lot of slow-moving and badly managed retail.

The threat of online is still being used by analysts and commentators, but its old news.

[richie1218] 07/10/2022 10:07

hxxps://www.morningstar.co.uk/uk/news/227207/stock-of-the-week-tesco.aspx

[vaneric1] 07/10/2022 09:46

I did two shopping trips yesterday one to Tesco for myself in the morning, the place was heaving with custom.
In the afternoon I took an old friend to Lidl her preferred shop, it was all but empty just one checkout open an no queues.
I think Lidl have overdone the new shop openings, we had just one in the three local towns until recently so people travelled but now with one in each town the three shops share the same customers.

[richie1218] 06/10/2022 21:14

Booker And Convenience Stores Star Performers For Tesco
6th October 2022

Whilst Tesco’s interim results yesterday showed how it was being impacted by cost inflation and the squeeze on consumers, some parts of its business posted strong sales figures as they recovered from the effects of the pandemic.

At Booker, like-for-like sales jumped 13.9% to £4.40bn, driven by the recovery in catering demand in the first quarter as it traded over a period of Covid restrictions in the prior year.

Catering sales grew by 35.5% to £1.83bn over the first half, driven by increased volume and inflation, which the group noted was particularly prominent in fresh food. The group highlighted that it had expanded its ‘Food Clubs’, which now have over 40,000 members who can access exclusive deals and discounts, and expanded a click & collect service for caterers to 134 sites.

Booker’s retail business also continued to grow, with sales up 6.7% (excluding tobacco) to £1.44bn. However, the wholesaler’s tobacco sales declined by 3.7% to £999m as people returned to overseas travel and duty-free imports increased.

Meanwhile, sales in Tesco’s 1,975 convenience stores grew by 6.5%, compared with a 1.4% rise in its large supermarkets. The retailer noted that sales in its c-stores located in towns and city centres jumped 25% after a “sharp recovery” in footfall in the wake of the pandemic restrictions.

The group opened 17 Tesco Express stores, 5 One Stop stores, 54 Booker Retail Partner stores, and 141 Premier stores during the first half period. It is planning a further 52 Express stores and 15 One Stop stores in the second half.

Tesco has also continued the roll-out of its Whoosh rapid grocery delivery service. It is now available from more than 400 Express stores, after rolling out to an additional 242 in the first half.

The group noted that the average basket size of the service has increased to around £25, with the offer now covering 2,600 products. It plans to roll out it out to a total of 800 stores by the end of its current financial year.

[johnwise] 06/10/2022 20:52

This is a very kind gesture.

Asda offers over 60s soup, a roll and unlimited tea and coffees for £1 in its 205 cafes to help customers get through cost of living crisis this winter

[konradpuss] 06/10/2022 19:44

Essential, you are right and wrong. If Tesco buy back all the freeholds in their J.V.'s
they would dramatically cut their lease liabilities. It is possible they have a right to do this, however they would need to increase borrowings.

The old guard (Clarke etc.) always counted in the J.V. freeholds as owned. If they were, I think their U.K. freehold ownership would be circa 75% of all property.

The good thing is Tesco do not have to issue any bonds for quite some while. They have surely played their debt very well.

[essentialinvestor] 06/10/2022 16:36

Dividend cost is cut with the number of shares bought back.

Lease liabilities arguably the longer term issue here, they have purchased some freeholds over recent years from memory.

[mickinvest] 06/10/2022 15:56

I wonder how much the deals for clubcard only holders hurts Tesco, I know my auld man doesn't shop there because of it and I lost my card a few months ago and now just avoid Tesco rather than getting a replacement card?

[wiltowin] 06/10/2022 14:24

The dividend will obviously have to shrink to compensate. My opinion is this is going to be 150p before the year end unfortunately.

[richie1218] 06/10/2022 12:18

Can Tesco shares go much lower? Tesco share slide indicates UK retail pressures.

It has been a bad couple of months for Tesco (TSCOI). The supermarket giant has seen its share price hit a five-year low.

The share price currently languishes around the 202p mark; compared to a previous low of 223p back in November 2017.

And in late August this year, the stock was priced around 270p before a steady descent to the current level.

The latest dip in share price follows Tesco trimming its profit forecasts for the year.

It now expects adjusted retail profits to come in at between £2.4bn and £2.5bn. Tesco had previously indicated they could go as high as £2.6bn.

In its interim results this week Tesco revealed adjusted operating profit was £1.24bn - down 10% from £1.38bn last year.

The company also confirmed it would freeze the price of over 1,000 items until 2023 to help customers through the current cost-of- living crisis.

This move has demonstrated that the company is prepared to sacrifice some profit in favour of protecting market share.

Russ Mould, investment director at AJ Bell argues that in an environment where consumers are being assailed from all sides by mounting energy bills, rising interest rates and higher costs for all manner of goods and services, companies selling essential staples rather than discretionary items are better placed.

“However, that doesn’t mean Tesco is immune from the weak consumer backdrop as its modestly lowered profit guidance reveals,” he says.

“Tesco has to try and offer attractive prices to stave off the competitive threat from the German discounters Aldi and Lidl and while it can rely on its purchasing power to some extent, it is still having to sacrifice margins to meet this challenge.

“On the plus side, Tesco is entering a difficult period with a decent market position and solid balance sheet”.

However, Mould adds that it is hard to see the coming months as anything other than extremely difficult, with cost inflation affected not only by higher energy and labour costs but also the cost of importing goods from overseas thanks to the lower sterling.

“The profitability of its online shopping business, which seemed to finally come into its own during the pandemic, will also be affected as smaller basket sizes still cost the same to deliver,” he says.

Sector-wide pressures
Danni Hewson, financial analyst at AJ Bell also predicts tough times for Tesco - and other UK retailers in the same space.

“Tesco’s whopping fall in pre-tax profits and warnings that shoppers are watching every penny sent its shares tumbling and pulled Sainsbury (SBRY) and Ocado (OCDO) down with it.

“Concerns about how far consumers might have to cut back when all of winter’s pressures get a grip is a big worry for all retailers and with bellwether Next (NXT) sending up warning flares, the upcoming earnings season is likely to deliver quite the blow to market sentiment”.

With Tesco at such a low valuation, does it offer investors an opportunity to buy the blue chip stock on the cheap?

While there could be more pain in store for Tesco yet, for those seeing the company as a long-term play, there could be some value to be had at the current price level.

Marketbeat shows the consensus analyst rating for Tesco is a ‘moderate buy’ with a consensus target price of 310.83p.

[yump] 06/10/2022 11:41

Dividend is under mild threat from simply being able to get 4.5% on a gov gilt with no risk to capital.

But at this price, with no good news of any sort on the horizon, the possibilty of capital gain plus income isn’t too shabby

[helen troy] 06/10/2022 11:05

I think the dividend alone will underpin the price.

[wiltowin] 06/10/2022 09:39

Surprised this has held above 200p given the many headwinds going forward, inflation, wages, loosing market share etc..

[unastubbs] 06/10/2022 05:45

I agree with Viscount, I'd buy more in fact but am at my limit now. Good results, the price was briefly positve in the morning then the market turned. I personally am not convinced that the discounters can keep all their plates spinning, their margins are even thinner than Tesco. I read an article in the Sunday Times a month back that Lidl has an operating margin of half a percent...that's surely not sustainable. But without shareholders to worry about I suppose it is - for now.

[unastubbs] 06/10/2022 05:42

Alastair Osbourne in The Times this morning

Tesco's Price Cuts

Tesco recipes are spoiling the shoppers. Here’s one picked out by Ken Murphy, the supermarket’s boss: a main course of McCain home chips, Heinz baked beans snap pots and Johnson’s baby cotton buds, with Ski strawberry mousse for afters and washed down with Robinsons orange squash. As Murphy puts it: “Customers are facing a tough time.” So what better moment to be freezing prices on more than a thousand “everyday products” until next year, including his choice “examples̶1;? It’s all part of bringing shoppers “magnetic value”. And who can blame the chain with the best buying power in the market for cranking up pressure on rivals during a cost of living squeeze? He’s seeing an “acceleration in changes to consumer behaviour”, with shoppers trading down to less snazzy brands, swapping frozen for fresh food, buying in smaller basket sizes and reining back online after the Covid blowout (report, page 44). His strategy should help Tesco maintain its 26.9 per cent market share, on Kantar data, but it doesn’t look to be doing wonders for the bottom line. Adjusted half-year retail profits fell 10 per cent to £1.25 billion, against tough corona comparatives, and Murphy has narrowed the full-year profits guidance to between £2.4 billion and £2.5 billion: down from a previous range that stretched to £2.6 billion. The shares fell 4 per cent to 201¼p, down around £1 since January. Yes they trade on a cheapish ten times future earnings, yielding 5.1 per cent. But, in these markets, Murphy may struggle to persuade investors that they’re better value than the food.