UK stock report - Tesco

UK

Tesco increases after finding support June 23, 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 increased 0.03% after hitting the lower Bollinger Band four times in the last ten days. This is a bullish signal. The lower Bollinger Band marks the trajectory of support on a stock price. The stock price has increased 0.05 GBX (0.03%) from its last trading session of June 22 to close at GBX166.55. Compared with the FTSE 100 Index which fell 15.2 points (0.2%) in the day, the relative price increase was 0.2%. The volume was 0.6 times the average daily trading volume of 35.1 million shares.

DIRECTORS BUYING

John Allan, director bought 100,000 shares worth GBP112,690 ($US143,601) on June 20. The price was GBP1.13.

SECTION 1

TESCO BULLISH SIGNALS

1.1 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.3. Compared with the rest of the market the stock is undervalued and ranks in the top quartile of stock by value of Q Ratio.

+ The company is cash rich with Cash to Market Capitalisation at 42.5%.

+ Revenue growth rate is negative but improving in recent years. [Year ended, all figures in %]

YearRevenue Growth
Feb 16-4.4
Feb 15-10.5

1.2 Undervaluation [compared with sector average]:

+ Price/Sales of 0.2 [0.3].

+ Price to EBITDA of 5.7 [7.6].

1.3 Technicals:

+ The present value of GBP1,000 (PV1000) invested twenty years ago in Tesco is GBP2,234, including a capital gain of GBP740 and dividend reinvested of GBP494.

+ 20 years Multiplier in GBP = 2.233x

+ Compound Annual Growth Rate (CAGR) in GBP = 4.1%

Jun 23, 2017: GBP 1 equals USD 1.27

1.4 Oversold/Bullish/Support Signals:

+ The Relative Strength Index (RSI) of 24.6 has breached the oversold line of 30, suggesting the price decrease of 8.3% in the last 14 days is unusually high.

+ The stock is oversold according to the Williams % R indicator of -95.1, suggesting the price is close to its 14-day low of GBX165.45.

1.5 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverGBP34 million (US$43.1 million)In Top 2%
Cash to MCap %42.5In Top 3%
Price to Sales0.2In Top 8%
Volatility %0.9In Top Quartile

SECTION 2

TESCO BEARISH SIGNALS

2.1 Fundamentals:

+ Total Liabilities/EBITDA of 14.8 which compares unfavourably with the Joseph Piotroski benchmark of 5.

+ As per the Du Pont analysis, Return on Equity is less than stellar at 2.6%. This is computed as net profit margin of 0.4% times asset turnover [sales/assets] of 1.2 times leverage factor [total assets/shareholders' equity] of 5.1.

2.2 Overvaluation [compared with sector average]:

+ Return on Equity 2.6% [6.2%].

+ Return on Assets 0.5% [1.8%].

+ Return on Capital Employed 4.4% [6.0%].

2.3 Low Performance Indicators:

DescriptionValueRank In Market
Return on Capital Employed [ROCE] %4.4In Bottom Quartile
EBITDA Margin %4.4In Bottom Quartile
Total Debt to Equity1.6In Bottom Quartile
P/E * P/NTA197.37In Bottom Quartile
Return on Assets [ROA] %0.5In Bottom 5%

SECTION 3

PRICE VOLUME DYNAMICS

3.1 Technicals:

+ Volume: there were 20,444,192 shares worth GBP34 million (US$43.1 million) traded today. In the past week, volume was 0.7 times average and the shares were down 2.7%.

+ Tesco is at a discount of 24.1% to its 12-month high of GBX219.40 on December 09, 2016. It is also at a premium of 16.4% to the 12-month low of GBX143.08 on June 24, 2016.

+ The present value of GBP1,000 (PV1000) invested one year ago in Tesco is GBP993, for a capital loss of GBP7.

PV10001-week1-month1-year
TSCO.L973912993
FTSE 100 Index9959841,171

3.2 Beta:

+ Beta: the Beta of Tesco stock is 1.4. A Beta greater than 1 suggests this is a high risk, high return stock with volatility greater than that of the market.

3.3 Turnover Rate & Turnover Period:

+ The turnover rate in the 12 months to date was 107.6% (or a turnover period of 11 months). This average length of ownership of the stock at 46.5 times the average holding period of 7 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 47,450 stocks] and Rank in the Europe Region [out of 8,291 stocks]

DescriptionValueGlobal RankIn Eur Region
MCap (US$)17.3B813202
Total Assets (US$)55.6B735177
Revenue (US$)68.9B12136
Net Profit (US$)174.7M3,421718
Return on Equity %2.623,8304,011
Net Profit Margin %0.426,2724,272
Price to Book2.421,2573,374
Price/Earnings83.220,0883,732
PV$1000 (1Year) US$*85629,6805,035
US$* Change (1Year) %-13.629,8525,033

* 1 year ago GBP 1 = USD 1.47

Jun 23, 2017: GBP 1 equals USD 1.27

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 501/615 in BSS News Bites' ranking of United Kingdom performers in the past year, a percentile ranking of 19.

SECTION 5

TESCO FINANCIALS

5.1 Financials Summary

Year endedFeb 2016Feb 2015Feb 2014
Sales (USD B)69.572.781.3
Pretax (USD)207M(8.1B)2.9B
Net (USD)176.3M(7.3B)1.2B
EPS (GBP)0.02(0.71)0.12

5.2 Annual Report for the year ended February 27, 2016 (year-on-year comparisons with previous corresponding period)-

Tesco Revenue down 4.4%

Favourable Changes:

+ Debt to Equity down 12.3% from 1.8 to 1.6.

+ Current ratio up 25% from 0.6 to 0.8.

+ Retained earnings to total assets up from 4.5% to 7.4%.

+ Total current assets to Total Assets up from 27% to 33.8%.

+ Cash to Total Assets up from 4.9% to 7%.

Unfavourable Changes:

+ Total revenue to total assets down from 1.3 to 1.2.

+ Interest expenses to Sales up from 1.1% to 1.6%.

+ Total non-current assets to Total Assets down from 73% to 66.2%.

+ Fixed Assets to Total Assets down from 46.6% to 40.9%.

+ Total Liabilities to EBITDA of 14.8 compares unfavourably with the Joseph Piotroski benchmark of <5

+ Total Liabilities to Operating Cash Flow of 16.6 compares unfavourably with the Joseph Piotroski benchmark of <4. However, it has improved by 78.4% from the previous year's ratio of 76.7.

Note:

+ Depreciation to Sales down from 2.7% to 2.5%.

+ Total liabilities to Total assets steady at 0.8.

+ Short-term investments to Total Assets up from 1.3% to 7.9%.

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
Business SectorFood & Drug Retailing
Industry GroupFood & Drug Retailing
Economic SectorConsumer Non-Cyclicals

6.3 Top Management

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

6.4 Issued Capital

Based on 8,187,717,309 issued shares the market capitalisation is GBP13.6 billion (US$17.3 billion).

SECTION 7

REPORTED BUYING AND SELLING

Insider Buying

June 20: Tesco director buys

Tesco (L:TSCO) director John Allan bought 100,000 shares worth GBP112,690 ($US143,601) on June 20. The purchase price was GBP1.13.

June 20: Tesco director buys

Tesco (L:TSCO) director John Allan bought 20,000 shares worth GBP34,206 ($US43,589) on June 19. The purchase price was GBP1.71.

June 19: Tesco director buys

Tesco (L:TSCO) director Antony Hoggett bought 28 shares worth GBP50 ($US64) on June 16. The purchase price was GBP1.79. The shares hit a thirteen-month low on the day.

June 19: Tesco director buys

Tesco (L:TSCO) director Alan Stewat bought 77 shares worth GBP138 ($US176) on June 16. The purchase price was GBP1.79. The shares hit a thirteen-month low on the day.

June 19: Tesco director buys

Tesco (L:TSCO) director Alison Horner bought 17 shares worth GBP30 ($US39) on June 16. The purchase price was GBP1.79. The shares hit a thirteen-month low on the day.

SECTION 8

STOCK BUZZ

8.1 Latest Buzz

News DateHeadlinePublisher
Jun 22, 2017Surveying Shares of Tesco PLC (LSE:TSCO)Financial NewsweekJun 22, 2017PRESS: Tesco Eyes Larger Dundee Site By Closing Cardiff Call CentreLondon South East (registration) (blog)Jun 22, 2017Streetwise Analysis on Shares of Tesco PLC (LSE:TSCO)Stock TalkerJun 22, 2017Tesco PLC\u0026#39; s (TSCO) “ Outperform” Rating Reiterated at MacquarieThe Cerbat Gem
Jun 21, 2017Breaking: Tesco PLC (LON:TSCO) Hold Rating Reaffirmed at Kepler Cheuvreux..KL DailyJun 21, 2017Tesco PLC (TSCO) PT Raised to GBX 145Markets DailyJun 21, 2017Shares Seesawing on Volume: Tesco PLC (TSCO.L)Ozark TimesJun 21, 2017Fsi Group Has Decreased Bank Amer (BAC) Stake By $1.40 Million, Tesco PLC (LON..UtahHerald.com
Jun 20, 2017Tesco Cancels Thousands of Online Food Orders as Systems FalterBloombergJun 20, 2017Unusual Activity Spotted in Tesco PLC (TSCDF)Clayton NewsJun 20, 2017Tesco PLC (LON:TSCO) Stock Buy Rating Reaffirmed at HSBC; The Target Given is..HuronReportJun 20, 2017Tesco Computer Glitch Hits Home Deliveries, Orders CancelledNew York TimesJun 20, 2017Zacks Investment Research Lowers Tesco PLC (TSCDY) to HoldStock ObserverJun 20, 2017Tesco PLC (TSCDY) Moving -2.58% in SessionStock Press Daily
Jun 19, 2017Tesco PLC (TSCDY) Stock Rating Upgraded by Zacks Investment ResearchBBNSJun 19, 2017Trading Watch on Shares of Tesco PLC (TSCO.L)Baldwin JournalJun 19, 2017Estimating the intrinsic value of Tesco PLC (LSE:TSCO)Simply Wall StJun 19, 2017Director Deals - Tesco PLC (TSCO)Stock Market Wire

8.2 Corporate Wire

To view Recent Company Headlines, click here

June 23: Tesco: Rule 2.9 Announcement - Securities in Issue

June 23: Form 8 (DD) - TESCO PLC

June 23: Form 8.3 - Tesco PLC

June 22: Form 8.3 - Tesco Plc

June 22: Form 8 (DD) - 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