UK stock report - Tesco
Tesco falls in 4 out of last 5 days August 17, 2018 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 GBX1.0 (0.4%) to close at GBX255.20. Compared with the FTSE 100 Index which rose 2.2 points (0.03%) in the day, the relative price change was -0.4%. The volume was 0.3 times the average daily trading volume of 34 million shares. Tesco's stock fell in four out of the last 5 trading days, for a 5-day fall of 4.1%. Its MCap is GBP25 billion (US$31.8 billion).
Highlights in today's Report:
SECTION 1 BEARISH SIGNALS
SECTION 2 BULLISH SIGNALS
SECTION 3 RELATED NEWS
SECTION 4 REPORTED BUYING AND SELLING
SECTION 5 GLOBAL RANKING
SECTION 6 SUMMARY FINANCIALS
SECTION 7 PROFILE
SECTION 1 TESCO BEARISH SIGNALS
Low Performance Indicators and rank of Tesco in the United Kingdom market:
|Description||TSCO Value||Rank In Market|
|Return on Assets [ROA] %||0.1||In Bottom 1%|
|EBITDA Margin %||1.8||In Bottom 4%|
|Total Debt to Equity||1.5||In Bottom 9%|
|Return on Capital Employed [ROCE] %||3.9||In Bottom Quartile|
+ The relative yield of TSCO, defined by its yield of 1.2%, divided by average yield of dividend yielding stocks in the FTSE 100 Index of 2.8% is 42.8%. This suggests Tesco 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 [ROE] is less than stellar at 0.7%; a deterioration from 2.9% last year. ROE 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.
YOY Deterioration in ROE and Profit Margin
|Du Pont Analysis||ROE||Profit Margin||Asset Turnover||Equity Multiplier|
1.2 Overvaluation [compared with sector average]:
+ Price to Book of 8.5 [3.7].
+ Return on Equity 0.7% [3.8%].
+ Return on Assets 0.1% [1.0%].
+ Return on Capital Employed 3.9% [4.7%].
+ Dividend yield of 1.2% [1.7%].
SECTION 2 TESCO BULLISH SIGNALS
+ The 4.3% discount to 12-month high of GBX266.80 against the 48.9% premium to 12-month low of GBX171.42 suggests the stock continues to push for new highs.
+ In the last three months the stock has hit a new 52-week high eleven times, pointing to a significant uptrend.
+ The present value of GBP1,000 (PV1000) invested one year ago in Tesco is GBP1,466, comprising a capital gain of GBP446 and dividend reinvested of GBP20.
|FTSE 100 Index||986||986||1,023|
+ The present value of GBP1,000 (PV1000) invested twenty years ago in Tesco is GBP2,201, including a capital gain of GBP1,052 and dividend reinvested of GBP149.
+ 20 years Multiplier in GBP = 2.201x
+ Compound Annual Growth Rate (CAGR) in GBP = 4.0%
Aug 17, 2018: GBP 1 equals USD 1.27
2.2 Oversold/Bullish/Support Signals:
+ The stock is oversold according to the Williams % R indicator of -82.3, suggesting the price is close to its 14-day low of GBX252.70.
High Performance Indicators and rank of Tesco in the United Kingdom market:
|Description||TSCO Value||Rank In Market|
|Today's Trading Turnover||GBP27.9 million (US$35.5 million)||In Top 2%|
|Price/MAP200||1.15||In Top Quartile|
|Price to Sales||0.6||In Top Quartile|
+ 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.
Annual Trend in Revenue and EBITDA:
+ Revenue growth rate has shown signs of recovery in recent years. [Year ended, all figures in %]
|Year||Revenue Growth||EBITDA Growth|
2.4 Aggregate Volumes and Prices:
[Volume Index or VI in brackets; 1 is average]
+ London: TSCO.L 10,942,038 [VI of 0.3] volume 99.9% of aggregate. Price: GBX255.20.
+ Xetra: TCO.ETR 9,589 [VI of 0.2] volume 0.09% of aggregate. Price: EUR2.86. Using the current exchange rate of EUR1 equals 89.4659GBX, The shares are at a 0.3% premium to the close price on London.
+ Aggregate volume: there were 11 million shares of Tesco worth GBP28 million traded today. The aggregate volume was 0.3 times average trading of 34.1 million shares.
The turnover rate in the 12 months to date was 73.4% (or a turnover period of 1 year 4 months). This average length of ownership of the stock at 68.0 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.
2.5 Moving Annual Return (Past 5 years)
Based on a dynamic start date of 5 years ago, the Moving Annual Return has been positive in 2 of the last 5 years. An investment a year ago in TSCO would have produced a return of 46.3%.
|TSCO||Close (GBX)||Dividends (GBX)||Capital Gain / (Loss) %||% Yield||Annual Return %|
|1 Yr ago||176.45||-||13.4||-||13.4|
|2 Yrs ago||155.59||-||(22.2)||-||(22.2)|
|3 Yrs ago||199.93||1.16||(17.7)||0.5||(17.2)|
|4 Yrs ago||243||15.27||(29.3)||4.4||(24.9)|
Close 5 years ago GBX343.85
+ Beta: the Beta of Tesco stock is 0.8. A Beta lower than 1 suggests this is a low risk, low return stock with volatility less than that of the market.
2.7 The Past Two Years
+ Tesco PLC (L:TSCO), has strengthened GBX101.05 (65.5%) over the past two years, compared with the FTSE 100 Index which rose 699.4 points (10.2%) in the two years for a relative price increase of 55.4%. The shares rose GBX22.30 (14.5%) a year ago and GBX78.75 (44.6%) in the past year to close at GBX255.20 today.
SECTION 3 TESCO RELATED NEWS
+ BSS/News Bites:
Tesco PLC is placed 152/1346 in BSS News Bites' ranking of United Kingdom performers in the past year, a percentile ranking of 89.
+ Vanguard Total World Stock ETF 2588:
The stock was one of 2588 global stocks selected by Vanguard Total World Stock ETF (VT) who sold 3,026,945 shares in the period May 31, 2018 to Jun 30, 2018 worth $US-764,619,308 at an estimated Volume Weighted Average Price (VWAP) of $US252.6043. As at Jun 30, 2018, the Vanguard Total World Stock ETF held 0 shares worth $US0 or 3,088,774% by value of the ETF's portfolio [Ranked 1895 out of 2588 by value and 70 out of 154 for United Kingdom].
SECTION 4 TESCO REPORTED BUYING AND SELLING
August 13: Tesco director buys
Tesco (L:TSCO) director Dave Lewis bought 52 shares worth GBP138 ($US176) on August 10. The purchase price was GBP2.65.
To view the previous 3 months' Releases in full, click here
SECTION 5 TESCO GLOBAL RANKING
Global Rank [out of 47,645 stocks] and Rank of Tesco in the Europe Region [out of 8,516 stocks]
|Description||Value||Global Rank||In Eur Region|
|Total Assets (US$)||45.9B||939||216|
|Net Profit (US$)||(40M)||41,091||6,743|
|Return on Equity %||0.7||28,163||4,677|
|Net Profit Margin %||0.1||28,442||4,543|
|Price to Book||8.6||32,806||4,872|
|PV1000 (1Year) USD*||1,450||4,956||705|
|US$* Change (1Year) %||42.6||4,745||676|
* 1 year ago GBP 1 = USD 1.29
Aug 17, 2018: GBP 1 equals USD 1.27
SECTION 6 TESCO SUMMARY FINANCIALS
6.1 Dividend History
+ Trailing 12 months dividend has deteriorated from GBX15.3 in 2014 to GBX3.0 in 2018.
6.2 Financials Summary (Past 3 years)
|Year ended||Feb 2017||Feb 2016||Feb 2015|
|Sales (USD B)||56.1||54||87.9|
+ 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.
SECTION 7 TESCO PROFILE
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.
7.2 Top Management
The chief executive officer is Dave Lewis.
7.3 Issued Capital
Based on 9,786,988,385 issued shares the market capitalisation is GBP25 billion (US$31.8 billion).
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
Business Sector: Food & Drug Retailing
Industry Group: Food & Drug Retailing
Economic Sector: Consumer Non-Cyclicals
L:TSCO; LON:TSCO; LN:TSCO; TSCO.L