UK stock report - Tesco

UK

Tesco falls 1.4% from 14-day high April 20, 2018 16:30 BST

NEWS BITES - EUROPE

Tesco PLC (L:TSCO), the largest Food & drug retailers company by market cap in the United Kingdom, was down 1.4% from its 14-day high of GBX242.70 on April 20. Its Williams % R is -7.7 which suggests it is overbought, a bearish signal. Its Relative Strength Index [RSI] is 87.8. An RSI reading of between 70 and 100 suggests the stock is close to its 14-day high, which is also a bearish signal. The stock price has decreased 0.30 GBX (0.1%) from its last trading session of April 19 to close at GBX239.40. Compared with the FTSE 100 Index which rose 39.2 points (0.5%) in the day, the relative price change was -0.7%. The volume was 0.9 times the average daily trading volume of 31.6 million shares.

YEAR-TO-DATE

Tesco advances 15% in 2018, outperforming 86% of the market

Tesco PLC (L:TSCO), advanced GBX31.0 (or 14.9%) year-to-date (YTD) in 2018 to close at GBX239.40. This means the stock has outperformed 86% of the United Kingdom-listed stocks in 2018. Compared with the FTSE 100 Index which has fallen 3.3% YTD, this is a relative price increase of 18.2%.

Highlights in today's Report:

SECTION 1 BEARISH SIGNALS

Fundamentals, Overvaluation [compared with sector average], Technicals, Overbought/Bearish/Resistance Signals, Low Performance Indicators

SECTION 2 BULLISH SIGNALS

Fundamentals, Technicals, High Performance Indicators, Moving Annual Return, Beta, Aggregate Volumes, Prices and Turnover Period

SECTION 3 RANKING

Global, Independent Ratings

SECTION 4 FINANCIALS

Financials Summary, Trailing 12 Months Dividends

SECTION 5 PROFILE

Activities, Industry & Sector, Top Management, Issued Capital

SECTION 6 REPORTED BUYING AND SELLING

SECTION 7 STOCK BUZZ

SECTION 1 TESCO BEARISH SIGNALS

1.1 Fundamentals:

+ The relative yield of the stock, defined by its yield of 0.4%, divided by average yield of dividend yielding stocks in the FTSE 100 Index of 2.7% is 15.6%. This suggests the stock is overvalued in dividend yield terms.

+ 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/Sales of 0.6 [0.5].

+ Price to Book of 8.9 [3.6].

+ Return on Equity 0.7% [4.6%].

+ Return on Assets 0.1% [1.2%].

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

+ Dividend yield of 0.4% [1.2%].

1.3 Technicals:

+ The 1.4% discount to 12-month high of GBX242.70 against the 45.6% premium to 12-month low of GBX164.47 suggests the climb might be peaking.

1.4 Overbought/Bearish/Resistance Signals:

+ The Relative Strength Index (RSI) of 87.8 has penetrated the overbought line of 70, suggesting the price gain of 17.6% in the last 14 days is unusually high.

+ The stock is overbought according to the Williams % R indicator of -7.7, suggesting the price is close to its 14-day high of GBX242.70.

+ The Money Flow Index [MFI] is 86.9 suggesting an overbought 14-day trend, being above 80. The Money Ratio of 6.6 suggests positive money flow was 6.6 times negative money flow.

+ The Stochastic indicator of 93.7 has broken through the overbought line of 80; this indicates the price is close to its 14-day high and is likely to revert to a downtrend.

1.5 Low Performance Indicators:

DescriptionValueRank In Market
Return on Assets [ROA] %0.1In Bottom 1%
EBITDA Margin %1.8In Bottom 5%
Total Debt to Equity1.5In Bottom Quartile
Return on Capital Employed [ROCE] %3.9In Bottom Quartile

SECTION 2 TESCO BULLISH SIGNALS

2.1 Fundamentals:

+ Tobin's Q Ratio, defined as MCap divided by Total Assets, is 0.7. Compared with the rest of the market the stock is undervalued.

+ 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:

+ In the last three months the stock has hit a new 52-week high seven times, pointing to a significant uptrend.

+ The present value of GBP1,000 (PV1000) invested one year ago in Tesco is GBP1,389, comprising a capital gain of GBP382 and dividend reinvested of GBP7.

PV10001-week1-month1-year
TSCO.L1,0251,1571,389
FTSE 100 Index1,0141,0441,035

+ The present value of GBP1,000 (PV1000) invested twenty years ago in Tesco is GBP1,789, including a capital gain of GBP600 and dividend reinvested of GBP189.

+ 20 years Multiplier in GBP = 1.789x

+ Compound Annual Growth Rate (CAGR) in GBP = 3.0%

Apr 20, 2018: GBP 1 equals USD 1.41

2.3 High Performance Indicators:

DescriptionValueRank In Market
Today's TurnoverGBP69.6 million (US$98 million)In Top 2%
Price/MAP501.11In Top 6%
Price/MAP2001.23In Top 8%
% Prem to Vol Wtd Price9.4In Top Quartile
Price to Sales0.6In Top Quartile

2.4 Moving Annual Return

Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 1 of the last 5 years. An investment a year ago in TSCO would have produced a return of 38.7%.

TSCOClose (GBX)Dividends (GBX)Capital Gain / (Loss) %% YieldAnnual Return %
Apr 20239.4138.20.638.7
1 Yr ago173.27-(4.2)-(4.2)
2 Yrs ago180.83-(23.2)-(23.2)
3 Yrs ago235.4411.29(14.9)4.1(10.8)
4 Yrs ago276.6316.4(16.5)4.9(11.6)

Close 5 years ago GBX331.38

2.5 Beta:

+ Beta: the Beta of Tesco stock is 0.9. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.

2.6 Aggregate Volumes, Prices and Turnover Period:

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

+ London: TSCO.L 29,074,720 [VI of 0.9] volume 99.91% of aggregate. Price: GBX239.40.

+ OTCBB: TSCDF.OTCBB 21,349 [VI of 1.2] volume 0.07% of aggregate. Price: $US3.41. Using the current exchange rate of USD1 equals 71.0262GBX, The shares are at a 1.2% premium to the close price on London.

+ Aggregate volume: there were 29.1 million shares of Tesco worth GBP69.7 million traded today. The aggregate volume was 0.9 times average trading of 31.7 million shares.

The turnover rate in the 12 months to date was 65.4% (or a turnover period of 1 year 6 months). This average length of ownership of the stock at 51.0 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 3 RANKING

3.1 Global Rank [out of 47,666 stocks] and Rank in the Europe Region [out of 8,559 stocks]

DescriptionValueGlobal RankIn Eur Region
MCap (US$)32.9B456117
Total Assets (US$)45.9B955240
Revenue (US$)56.1B19467
Net Profit (US$)(40M)40,4476,633
Return on Equity %0.727,5964,545
Net Profit Margin %0.127,9994,471
Price to Book7.731,0794,593
Yield %0.520,1703,438
US$* Change (1Year) %22.612,7792,879

Apr 20, 2018: GBP 1 equals USD 1.41

3.2 Independent Ratings

+ FT 500:

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

+ Fortune 500:

It was ranked 92 by total revenues in the Fortune 500 annual list for 2017; a deterioration over a year from rank 72 in 2016.

+ Forbes 2000:

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

+ BSS/News Bites:

It is placed 214/1372 in BSS News Bites' ranking of United Kingdom performers in the past year, a percentile ranking of 84.

+ Vanguard Total World Stock ETF 7517:

The stock was one of 7517 global stocks selected by Vanguard Total World Stock ETF (VT) who bought 200,152 shares in the period Nov 30, 2017 to Jan 31, 2018 worth $US41,897,218 at an estimated Volume Weighted Average Price (VWAP) of $US209.327. As at Jan 31, 2018, the Vanguard Total World Stock ETF held 2,472,059 shares worth $US7,331,496 or 0.05% by value of the ETF's portfolio [Ranked 417 out of 7517 by value and 26 out of 314 for United Kingdom].

SECTION 4 TESCO FINANCIALS

4.1 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(1.096)

Net profit slumped from US$138 million in 2016 to a loss of US$40 million in 2017. Earnings Per Share (EPS) fell from 1.69c to -0.49c.

4.2 Trailing 12 Months Dividends

Trailing 12 Months ToValue (GBX)
20 Apr 20181

SECTION 5 TESCO PROFILE

5.1 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.

5.2 Industry & Sector

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

5.3 Top Management

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

5.4 Issued Capital

Based on 9,770,000,000 issued shares the market capitalisation is GBP23.4 billion (US$32.9 billion).

SECTION 6 REPORTED BUYING AND SELLING

Insider Buying

March 26: Tesco director buys

Tesco (L:TSCO) director Alan Stewart bought 68 shares worth GBP137 ($US194) on March 23. The purchase price was GBP2.02. The shares hit a two-month low on the day.

March 26: Tesco director buys

Tesco (L:TSCO) director Adrian Morris bought 68 shares worth GBP137 ($US194) on March 23. The purchase price was GBP2.02. The shares hit a two-month low on the day.

March 26: Tesco director buys

Tesco (L:TSCO) director Jason Tarry bought 68 shares worth GBP137 ($US194) on March 23. The purchase price was GBP2.02. The shares hit a two-month low on the day.

March 26: Tesco director buys

Tesco (L:TSCO) director Alison Horner bought 15 shares worth GBP30 ($US43) on March 23. The purchase price was GBP2.02. The shares hit a two-month low on the day.

March 26: Tesco director buys

Tesco (L:TSCO) director Dave Lewis bought 68 shares worth GBP137 ($US194) on March 23. The purchase price was GBP2.02. The shares hit a two-month low on the day.

SECTION 7 STOCK BUZZ

Corporate Wire

To view Recent Company Headlines, click here

April 19: Tesco: Tender Offer to Purchase Outstanding Notes

Tesco PLC (the Company) announces today separate invitations to holders of its outstanding (a) Pound350,000,000 5.50 per cent. Notes due 2019 (ISIN: XS0159013068) (the 2019 Notes), (b) Pound900,000,000 6.125 per cent. Notes due 2022 (ISIN: XS0414345974) (the 2022 Notes), (c) Pound515,000,000 5 per cent.

April 17: Tesco announces dividend

Tesco today announced a final dividend of GBX2.0 per share. The ex dividend date is Thursday, May 17, 2018 and it is payable on Friday, June 22.

April 11: Tesco announces AGM

Tesco has announced its Annual General Meeting will take place on Thursday, April 12.

April 11: Tesco: Preliminary Results 2017/18

Preliminary Results 2017/18

ANOTHER STRONG YEAR OF PROGRESS

FIRMLY ON TRACK TO DELIVER MEDIUM-TERM AMBITIONS

April 03: Tesco: Total Voting Rights

TESCO PLC - TOTAL VOTING RIGHTS AND CAPITAL

In accordance with the requirements of the FCA's Disclosure Guidance and Transparency Rule 5.6.1, Tesco PLC (the "Company") hereby notifies the market that the Company's issued share capital as at 31 March 2018 consisted of 9,766,305,447 ordinary shares of 5 pence each.

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

RIC: TSCO.L

Tesco Plc

Source: www.BuySellSignals.com