Tesco (LON:TSCO) Issues Quarterly Earnings Results

Tesco (LON:TSCO) announced its quarterly earnings results on Thursday. The retailer reported GBX 17.50 earnings per share for the quarter, Digital Look Earnings reports. Tesco had a net margin of 2.42% and a return on equity of 16.05%.

Here are the key takeaways from Tesco’s conference call:

• Strong first-half financial performance: Group sales rose 1.6% at constant rates, adjusted operating profit increased 6.3%, EPS grew 12.2%, and free cash flow reached £1.57 billion. Tesco raised its share buyback by £200 million to £950 million.
• Tesco narrowed its full-year adjusted operating profit outlook to the upper half of the previous £3.15 billion–£3.3 billion range, supported by resilient consumers, cost savings, favorable product mix, and growth in Tesco Media and Whoosh.
• Digital and rapid-delivery operations showed strong momentum, with U.K. online like-for-like sales up 8.4% and Whoosh sales up about 37%–40%. Partnerships with Uber Eats and Deliveroo are attracting new customers with lower-than-expected cannibalization.
• Customer satisfaction reached a record high, while Tesco continued investing in value, quality, colleague pay, and innovation. Clubcard personalization expanded to roughly 2.5 million customers, and more than 800 new or improved products were launched.
• Tesco increased full-year capital expenditure guidance to approximately £1.7 billion, around £200 million above last year, while management cautioned that the second half faces uncertainty from the U.K. budget, higher energy bills, Christmas trading, and potential cost inflation.

Tesco Stock Up 5.1%

Shares of Tesco stock opened at GBX 500.28 on Thursday. The stock has a market capitalization of £31.16 billion, a PE ratio of 18.46, a price-to-earnings-growth ratio of 1.43 and a beta of 0.57. Tesco has a 52-week low of GBX 411.70 and a 52-week high of GBX 520.60. The company has a debt-to-equity ratio of 131.55, a quick ratio of 0.60 and a current ratio of 0.59. The company has a 50-day simple moving average of GBX 469.72 and a two-hundred day simple moving average of GBX 468.44.

Analyst Ratings Changes

A number of analysts have recently weighed in on the stock. Jefferies Financial Group reiterated a “hold” rating and set a GBX 480 target price on shares of Tesco in a report on Thursday. Shore Capital Group reaffirmed a “hold” rating and set a GBX 480 price target on shares of Tesco in a research report on Thursday. Deutsche Bank Aktiengesellschaft lifted their price objective on Tesco from GBX 500 to GBX 525 and gave the stock a “buy” rating in a research report on Tuesday, June 23rd. Finally, JPMorgan Chase & Co. decreased their target price on Tesco from GBX 500 to GBX 490 and set an “overweight” rating for the company in a report on Wednesday, September 2nd. Two equities research analysts have rated the stock with a Buy rating and two have issued a Hold rating to the company’s stock. According to MarketBeat, Tesco currently has a consensus rating of “Moderate Buy” and an average target price of GBX 493.75.

Tesco Company Profile

Tesco was built to be a champion for customers, serving them every day with affordable, healthy and sustainable food. Across the Group, our purpose is at the core of what we do: serving our customers, communities and planet a little better every day.
Our fantastic team of over 340,000 colleagues go above and beyond to serve our customers. We work hard to be a place where everyone is welcome, where all colleagues can be at their best and build the skills to grow their careers.