UK stock report - Tesco

UK

Tesco decreases 1.3% on firm volume August 18, 2017 16:30 BST

NEWS BITES - EUROPE

Tesco PLC (L:TSCO), the largest Food & drug retailers company by market cap in the United Kingdom, has decreased GBX2.30 (1.3%) from its last trading session of August 17 to close at GBX176.55. Compared with the FTSE 100 Index which fell 63.9 points (0.9%) in the day, the relative price change was -0.4%. The fall was exacerbated by firm volume of 1.1 times the average daily volume of 34 million shares.

DIRECTORS BUYING

Alan Stewart, director bought 78 shares worth GBP138 ($US179) on August 11. The price was GBP1.77.

SECTION 1

TESCO BEARISH SIGNALS

1.1 Fundamentals:

+ Total Liabilities/EBITDA of 38.9 which compares unfavourably with the Joseph Piotroski benchmark of 5.

+ As per the Du Pont analysis, Return on Equity is less than stellar at 0.7%. This is computed as net profit margin of 0.1% times asset turnover [sales/assets] of 1.2 times leverage factor [total assets/shareholders' equity] of 7.1. Also, this has deteriorated from 2.9% last year.

Du Pont AnalysisROEProfit MarginAsset TurnoverEquity Multiplier
Current Year0.70.11.27.1
Previous Year2.90.51.25.1

1.2 Overvaluation [compared with sector average]:

+ Price to Book of 5 [2.8].

+ Return on Equity 0.7% [6.0%].

+ Return on Capital Employed 3.9% [5.6%].

1.3 Technicals:

Downtrend: The stock dropped 1.3% on high volatility today.

+ The price decreased 0.4% in the last week.

1.4 Low Performance Indicators:

DescriptionValueRank In Market
Price Change %-1.3In Bottom Quartile
Return on Capital Employed [ROCE] %3.9In Bottom Quartile
Total Debt to Equity1.5In Bottom Quartile
EBITDA Margin %1.8In Bottom 4%
% Prem to Vol Wtd Price0.1In Bottom 1%
Return on Assets [ROA] %0.1In Bottom 1%

SECTION 2

TESCO BULLISH SIGNALS

2.1 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.4. Compared with the rest of the market the stock is undervalued and ranks in the top quartile of stock by value of Q Ratio.

+ Revenue growth rate has shown signs of recovery in recent years. [Year ended, all figures in %]

YearRevenue GrowthEBITDA Growth
Feb 173.9-5.6
Feb 16-38.5-

2.2 Technicals:

+ The present value of GBP1,000 (PV1000) invested one year ago in Tesco is GBP1,107, for a capital gain of GBP107.

PV10001-week1-month1-year
TSCO.L9961,0131,107
FTSE 100 Index1,0029841,066

+ The present value of GBP1,000 (PV1000) invested twenty years ago in Tesco is GBP2,141, including a capital gain of GBP668 and dividend reinvested of GBP473.

+ 20 years Multiplier in GBP = 2.141x

+ Compound Annual Growth Rate (CAGR) in GBP = 3.9%

Aug 18, 2017: GBP 1 equals USD 1.29

2.3 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverGBP66.7 million (US$86 million)In Top 2%
Price to Sales0.3In Top Quartile

SECTION 3

PRICE VOLUME DYNAMICS

3.1 Volatility:

+ Tesco is at a discount of 19.5% to its 12-month high of GBX219.40 on December 09, 2016. It is also at a premium of 11.5% to the 12-month low of GBX158.40 on August 19, 2016.

3.2 Beta & Alpha:

+ Beta: the Beta of Tesco stock is 1.3. A Beta greater than 1 suggests this is a high risk, high return stock with volatility greater than that of the market.

+ Alpha: the Alpha of the stock is 5.9. The actual return of 13.19% exceeded the expected return of 7.3%, reflecting outperformance.

3.3 Aggregate Volumes, Prices and Turnover Period:

[Volume Index or VI in brackets; 1 is average]

+ London: TSCO.L 37,804,695 [VI of 1.1] volume 99.89% of aggregate. Price: GBX176.55.

+ Xetra: TCO.ETR 36,741 [VI of 0.7] volume 0.1% of aggregate. Price: EUR1.97. Using the current exchange rate of EUR1 equals 91.02GBX, The shares are at a 1.8% premium to the close price on London.

+ Aggregate volume: there were 37.8 million shares of Tesco worth GBP66.8 million traded today. The aggregate volume was 1.1 times average trading of 34.2 million shares.

The turnover rate in the 12 months to date was 100.2% (or a turnover period of 1 year ). This average length of ownership of the stock at 33.3 times the average holding period of 11 days for stocks in the FTSE 100 Index suggests a larger number of core investors, making a long-term investment safer.

SECTION 4

RANKING

4.1 Global Rank [out of 47,594 stocks] and Rank in the Europe Region [out of 8,387 stocks]

DescriptionValueGlobal RankIn Eur Region
MCap (US$)18.6B768195
Total Assets (US$)45.9B897219
Revenue (US$)56.1B17561
Net Profit (US$)(40M)40,0386,631
Return on Equity %0.726,6564,461
Net Profit Margin %0.127,1454,466
Price to Book5.126,3804,318
PV$1000 (1Year) US$*1,09617,3893,602
US$* Change (1Year) %13.116,6593,472

* 1 year ago GBP 1 = USD 1.3

Aug 18, 2017: GBP 1 equals USD 1.29

4.2 Independent Ratings

Tesco PLC is the 35th largest by revenue in the FT Global 500.

It is the 56th largest by revenue in the Forbes Global 2000.

It was ranked 330 by Newsweek and Corporate Knights Capital in the World's 500 Greenest Companies 2014. It had outstanding scores of 36.4% in Carbon productivity, 18.5% in Energy productivity and 10.1% in Reputation.

It is placed 680/1238 in BSS News Bites' ranking of United Kingdom performers in the past year, a percentile ranking of 45.

SECTION 5

TESCO FINANCIALS

5.1 Financials Summary

Year endedFeb 2017Feb 2016Feb 2015
Sales (USD B)56.15487.9
Pretax (USD)145M202M(9.8B)
Net (USD)(40M)138M(8.9B)
EPS (USD)(0.0049)0.0169-

5.2 Annual Report for the year ended February 25, 2017 (year-on-year comparisons with previous corresponding period)-

Favourable Changes:

+ Total revenue up 3.9% from $US54.0b to $US56.1b.

Unfavourable Changes:

+ EBIT Margin down from 2.0% to 1.8%.

+ EBIT to total assets down from 2.5% to 2.2%.

+ Administration expenses to Sales up from 3.4% to 3.6%.

+ Profit before tax to Sales down from 0.4% to 0.3%.

+ Total liabilities to Total assets up 7.5% from 0.8 to 0.9.

+ Retained earnings to total assets down from 7.4% to 0.7%.

+ Fixed Assets to Total Assets down from 40.8% to 39.5%.

+ Total Liabilities to EBITDA of 38.9 compares unfavourably with the Joseph Piotroski benchmark of <5. This ratio has deteriorated by 19% from the previous year's ratio of 32.7.

+ Total Liabilities to Operating Cash Flow of 19.9 compares unfavourably with the Joseph Piotroski benchmark of <4. This ratio has deteriorated by 19.9% from the previous year's ratio of 16.6.

+ Net tangible assets per share down 34.3% from $US0.7 to $US0.46.

Note:

+ Interest cover steady at 1.2.

+ Total revenue to total assets steady at 1.2.

+ Cost of Goods Sold to Sales up from 94.7% to 94.8%.

+ Tax expenses to Sales up from 0.1% to 0.2%.

+ Current ratio steady at 0.8.

+ Total non-current assets to Total Assets down from 66.6% to 66.4%.

+ Total current assets to Total Assets up from 33.4% to 33.6%.

+ Intangibles to Total Assets down from 6.5% to 5.9%.

+ Current Inventory to Total Assets down from 5.5% to 5%.

SECTION 6

TESCO PROFILE

6.1 Activities

Tesco PLC, together with its subsidiaries, operates as a grocery retailer. It operates stores that primarily offer food products, as well as general merchandise, clothing products, and electrical products. The company also provides telecom, retail banking, financial, and insurance services. In addition, it engages in data analysis, distribution, and property operations. Tesco PLC also sells its products through online and catalog. The company operates in the United Kingdom, China, the Czech Republic, Hungary, the Republic of Ireland, India, Japan, Malaysia, Poland, Slovakia, South Korea, Thailand, Turkey, and the United States. It operates approximately 5,000 stores. The company was formerly known as Tesco Stores (Holdings) Limited and changed its name to Tesco PLC in 1983. Tesco PLC was founded in 1919 and is based in Cheshunt, the United Kingdom.

6.2 Industry & Sector

Classification LevelName of Sector
Industry GroupFood & Drug Retailing
Economic SectorConsumer Non-Cyclicals
Business SectorFood & Drug Retailing

6.3 Top Management

The chief executive officer is Dave Lewis and the chief financial officer is Alan Stewart.

6.4 Issued Capital

Based on 8,188,836,904 issued shares the market capitalisation is GBP14.5 billion (US$18.6 billion).

SECTION 7

REPORTED BUYING AND SELLING

Insider Buying

August 14: Tesco director buys

Tesco (L:TSCO) director Dave Lewis bought 78 shares worth GBP138 ($US179) on August 11. The purchase price was GBP1.77. The shares hit a ten-day low on the day.

August 14: Tesco director buys

Tesco (L:TSCO) director Alison Horner bought 17 shares worth GBP30 ($US39) on August 11. The purchase price was GBP1.77. The shares hit a ten-day low on the day.

August 14: Tesco director buys

Tesco (L:TSCO) director Jason Tarry bought 78 shares worth GBP138 ($US179) on August 11. The purchase price was GBP1.77. The shares hit a ten-day low on the day.

August 14: Tesco director buys

Tesco (L:TSCO) director Adrian Morris bought 78 shares worth GBP138 ($US179) on August 11. The purchase price was GBP1.77. The shares hit a ten-day low on the day.

August 14: Tesco director buys

Tesco (L:TSCO) director Bernard Higgins bought 78 shares worth GBP138 ($US179) on August 11. The purchase price was GBP1.77. The shares hit a ten-day low on the day.

SECTION 8

STOCK BUZZ

8.1 Latest Buzz

News DateHeadlinePublisher
Aug 17, 2017Tesco PLC (TSCO) Given Buy Rating at HSBC Holdings plcBNB Daily (blog)
Aug 17, 2017Tesco PLC (TSCO.L) Seeing Increased Volatility in SessionClayton News
Aug 17, 2017TESCO PLC LS-05 (TCO.DE) Sees Chaikin Money Flow Holding Above ZeroStock Talker
Aug 17, 2017Stock Tracker: Trend Analysis on Tesco PLC (TSCO.L)The Standard
Aug 17, 2017Tullow Oil PLC (TLW.L) and Tesco PLC (TSCO.L) Needle Moving on VolumeUnion Trade Journal
Aug 16, 2017Form 8.5 (EPT/NON-RI) - TESCO PLC - AMENDMENTBusiness Wire (press release)
Aug 16, 2017Market Risers: Tesco PLC, The Sage Group plc, Whitbread plc, WM Morrison..DirectorsTalk Interviews
Aug 16, 2017TESCO PLC LS-05 (TCO.DE) Chart Watch: Following the IndicatorsHayden Business Journal
Aug 16, 2017Tesco PLC (LSE:TSCO) MF Rank UpdatePearson Press
Aug 16, 2017Trading Updates on Shares of Tesco PLC (TSCO.L)Rives Journal
Aug 16, 2017Tesco PLC (TSCDF) Sees Schaff Trend Cycle Trending UpSheridan Daily
Aug 16, 2017Tesco PLC (TSCDY) Downgraded by Zacks Investment ResearchWeek Herald
Aug 15, 2017Sizing Up the MACDH For Tesco PLC (TSCDF)BVN
Aug 15, 2017Tesco PLC (TSCO.L) Seeing Increased Volatility in SessionDavidson Register
Aug 15, 2017TESCO PLC LS-05 (TCO.DE) Sees The Tape Move Mid-MarketFinancial Newsweek
Aug 15, 2017Share Activity Lifted for Tesco PLC (TSCDY) in SessionMelville Review
Aug 15, 2017Tesco PLC (TSCDF) Under the Watchful Eye of InvestorsRockville Register
Aug 15, 2017TESCO PLC LS-05 (TCO.DE) Money Flow Index Nearing Key LevelThe Times
Aug 14, 2017Drilling into the Technicals \u0026amp; Valuation For Tesco PLC (TSCDY)Lenox Ledger
Aug 14, 2017Tesco PLC (TSCDY) Sees The Tape Move Mid-MarketOzark Times
Aug 14, 2017Chartists Are Peeling Back The Layers on TESCO PLC LS-05 (TCO.DE)Sparta Review

8.2 Corporate Wire

To view Recent Company Headlines, click here

August 18: TESCO: RULE 2.9 ANNOUNCEMENT - SECURITIES IN ISSUE

In accordance with Rule 2.9 of the Takeover Code, Tesco PLC (the "Company") hereby confirms that, as at 17 August 2017, it had 8,188,872,721 Ordinary Shares of 5 pence each in issue and admitted to trading on the London Stock Exchange and the Irish Stock Exchange. The Company currently holds no Ordinary Shares in treasury.

The Company's International Securities Identification Number ("ISIN") is GB0008847096.

The Company has an ADR programme.

August 18: Form 8 (DD) - TESCO PLC

BGEO Group PLC (BGEO - LSE: BGEO LN) announces that on 16 August 2017, Numis Securities Limited purchased on behalf of BGEO the number of ordinary shares of Pound0.01 each on the London Stock Exchange as set out in the table below (the Repurchased Shares) pursuant to the BGEO share buyback and cancellation programme which commenced on 10 March 2017 (the Buyback Programme).

August 17: Form 8.5 (EPT/NON-RI) - TESCO PLC

PUBLIC OPENING POSITION DISCLOSURE/DEALING DISCLOSURE BY AN

EXEMPT PRINCIPAL TRADER WITHOUT RECOGNISED INTERMEDIARY ("RI") STATUS (OR WHERE RI STATUS IS NOT APPLICABLE)

August 17: Form 8 (DD) - TESCO PLC

PUBLIC DEALING DISCLOSURE BY A PARTY TO AN OFFER OR PERSON ACTING IN CONCERT (INCLUDING DEALINGS FOR THE ACCOUNT OF DISCRETIONARY INVESTMENT CLIENTS)

August 17: Form 8.3 - Tesco Plc

(a) Full name of discloser: Invesco Ltd. (b) Owner or controller of interests and short positions disclosed, if different from 1(a): The naming of nominee or vehicle companies is insufficient. For a trust, the trustee(s), settlor and beneficiaries must be named. (c) Name of offeror/offeree in relation to whose relevant securities this form relates: Use a separate form for each offeror/offeree Tesco plc.

Contact: 44-1992-646484

Physical Address: PO Box 18, Cheshunt, Waltham Cross, EN8 9SL, United Kingdom

State/Province/Country: United Kingdom

Country of Incorporation: United Kingdom

Exchange: London Stock Exchange

ISIN: GB0008847096

L:TSCO; LON:TSCO; LN:TSCO; TSCO.L

PermID: 4295895258

Tesco Plc

Source: www.BuySellSignals.com