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Tesco
(OTC:TSCDY)
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Rating:77Outperform
Price Target:
$19.50
▲(8.39% Upside)
Action:Reiterated
Date:04/21/26
The score is driven primarily by solid financial performance (improving earnings and strong recent cash generation) and favorable valuation (low P/E with a ~3% dividend). Technicals are supportive with the stock trading above key moving averages, while the earnings call reinforced confidence via upgraded free-cash-flow expectations and continued buybacks, tempered by thin margins, cost inflation, and higher net debt.
Positive Factors
Free cash flow capacity
Upgraded medium-term free cash flow guidance and a £1.96bn outturn (up 12%) indicate durable cash generation. That persistent FCF can fund capex, progressive dividends and buybacks while supporting Save-to-Invest programs, enhancing strategic optionality and financial resilience over 2–6 months.
Negative Factors
Structurally thin margins
Grocery inherently operates on low gross and net margins, leaving limited buffer against cost inflation or input shocks. Even with sales expansion, thin margins constrain profit sensitivity and limit ability to absorb sustained cost increases without eroding returns or necessitating further price/value trade-offs.
Read all positive and negative factors
Positive Factors
Negative Factors
Free cash flow capacity
Upgraded medium-term free cash flow guidance and a £1.96bn outturn (up 12%) indicate durable cash generation. That persistent FCF can fund capex, progressive dividends and buybacks while supporting Save-to-Invest programs, enhancing strategic optionality and financial resilience over 2–6 months.
Read all positive factors
Tesco Key Performance Indicators (KPIs)
Any
Adjusted Operating Profit by Segment
Reveals profitability across different business areas, highlighting which segments drive earnings and where operational improvements or challenges exist.
Reveals profitability across different business areas, highlighting which segments drive earnings and where operational improvements or challenges exist.
Data provided by:
The Fly
The FlyTesco (TSCDY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$37.98B
Dividend Yield3.08%
Average Volume (3M)42.99K
Price to Earnings (P/E)17.0
Beta (1Y)-0.04
Revenue Growth10.59%
EPS Growth21.22%
CountryUS
Employees340,000
SectorConsumer Defensive
Sector Strength42
IndustryGrocery Stores
Share Statistics
EPS (TTM)0.81
Shares Outstanding2,097,512,700
10 Day Avg. Volume0
30 Day Avg. Volume42,989
Financial Highlights & Ratios
PEG Ratio1.42
Price to Book (P/B)2.72
Price to Sales (P/S)0.43
P/FCF Ratio11.20
Enterprise Value/Market Cap1.09
Enterprise Value/Revenue0.56
Enterprise Value/Gross Profit7.41
Enterprise Value/Ebitda8.79
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusModerate Buy
Number of Analyst Covering1
EPS Forecast (FY)1.24
Revenue Forecast (FY)$100.12B
Tesco Business Overview & Revenue Model
Company Description
Tesco PLC, along with its various subsidiaries, operates primarily within the retail and financial services sectors. The company distributes food items through a vast network of approximately 4,752 physical stores located across the United Kingdom...
How the Company Makes Money
Tesco makes money primarily by selling goods to consumers through its retail network and digital channels. The largest revenue stream is retail sales from grocery and everyday products sold in-store (superstores, supermarkets, convenience formats)...
Tesco Earnings Call Summary
Earnings Call Date:Apr 16, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Oct 08, 2026
Earnings Call Sentiment Positive
The call presents a strongly positive operating and financial performance: solid top-line growth, market share gains, improved customer satisfaction, robust free cash flow ahead of guidance, accelerated digital and retail-media progress, and meaningful colleague and ESG actions. Headline profit growth was modest and the business faces near-term headwinds including operating cost inflation, some regional and category softness, adjusting charges, higher net debt versus the prior year and lingering uncertainty from the conflict in the Middle East which widened guidance. On balance, the positive operational momentum, cash generation, strategic initiatives and shareholder returns outweigh the lowlights.Positive Updates
Group Sales and Like-for-Like Growth
Group sales grew 4.3% at constant exchange rates with like-for-like sales up 3.5%, driven by broad-based growth across operating segments.
Negative Updates
Modest Operating Profit Growth
Group adjusted operating profit growth was relatively small at ~0.6% (constant rates) despite sales growth, indicating margin pressure from investments and operating cost inflation.
Read all updates
Q4-2026 Updates
Positive
Negative
Group Sales and Like-for-Like Growth
Group sales grew 4.3% at constant exchange rates with like-for-like sales up 3.5%, driven by broad-based growth across operating segments.
Read all positive updates
Company Guidance
Tesco guided group adjusted operating profit of £3.0–£3.3bn for the year ahead, expects free cash flow to sit within its upgraded medium‑term range of £1.5–£2.0bn per year (previously £1.4–£1.8bn), and plans around £1.6bn of capital expenditure; the board announced a further £750m share buyback, remains committed to a progressive dividend policy targeting roughly a 50% payout ratio (proposed 9.7p final, 14.5p full‑year, +5.8%), and aims to unlock a further £500m of Save‑to‑Invest savings while maintaining a strong balance sheet (net debt £10.56bn, net debt/EBITDA 2.1x) and returning surplus capital after reinvestment (last year Tesco delivered £1.96bn free cash flow, up 12%, and returned £2.4bn to shareholders).Tesco Financial Statement Overview
Summary
Income Statement
73
Positive
Balance Sheet
64
Positive
Cash Flow
70
Positive
| Breakdown | Feb 2026 | Feb 2025 | Feb 2024 | Feb 2023 | Feb 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 73.29B | 69.92B | 68.19B | 65.76B | 61.34B |
| Gross Profit | 5.52B | 5.05B | 4.66B | 4.68B | 4.69B |
| EBITDA | 4.98B | 4.77B | 4.83B | 3.23B | 4.40B |
| Net Income | 1.78B | 1.63B | 1.19B | 737.00M | 1.48B |
Balance Sheet | |||||
| Total Assets | 39.50B | 38.84B | 47.04B | 46.13B | 49.35B |
| Cash, Cash Equivalents and Short-Term Investments | 4.17B | 4.48B | 4.67B | 4.45B | 4.65B |
| Total Debt | 15.08B | 14.67B | 14.84B | 15.08B | 15.36B |
| Total Liabilities | 28.03B | 27.23B | 35.37B | 33.90B | 33.71B |
| Stockholders Equity | 11.47B | 11.67B | 11.67B | 12.24B | 15.66B |
Cash Flow | |||||
| Free Cash Flow | 2.78B | 1.68B | 2.73B | 2.56B | 2.61B |
| Operating Cash Flow | 4.12B | 2.92B | 3.84B | 3.81B | 3.79B |
| Investing Cash Flow | -937.65M | -441.00M | -1.70B | -790.00M | -1.77B |
| Financing Cash Flow | -3.07B | -2.94B | -1.86B | -3.19B | -2.23B |
Tesco Technical Analysis
Positive
17.99
Price Trends
18.56
Negative
18.68
Negative
18.03
Positive
Market Momentum
-0.10
Positive
49.05
Neutral
37.27
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSCDY, the sentiment is Positive. The current price of 17.99 is below the 20-day moving average (MA) of 18.16, below the 50-day MA of 18.56, and below the 200-day MA of 18.03, indicating a neutral trend. The MACD of -0.10 indicates Positive momentum. The RSI at 49.05 is Neutral, neither overbought nor oversold. The STOCH value of 37.27 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSCDY.
Tesco Risk Analysis
Tesco disclosed 15 risk factors in its most recent earnings report. Tesco reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Tesco Peers Comparison
UnderperformOutperform
Sector (62)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $37.98B | 17.03 | 16.05% | 3.08% | 10.59% | 21.22% | |
72 Outperform | $7.72B | 15.62 | 36.06% | ― | 10.25% | 17.03% | |
67 Neutral | $1.98B | 20.07 | 7.49% | 2.06% | 4.14% | -0.27% | |
62 Neutral | $20.33B | 14.63 | -3.31% | 3.23% | 1.93% | -12.26% | |
52 Neutral | $35.59B | 33.37 | 13.04% | 2.15% | 1.14% | -53.47% | |
51 Neutral | $6.66B | 42.47 | 8.17% | 3.49% | 3.46% | -80.55% | |
49 Neutral | $981.31M | -2.55 | -36.58% | ― | 6.04% | -2370.84% |
* Consumer Defensive Sector Average
TSCDY
Tesco
18.21
2.20
13.70%
KR
Kroger Company
57.73
-12.53
-17.84%
WMK
Weis Markets
80.09
8.97
12.61%
SFM
Sprouts Farmers
82.14
-82.50
-50.11%
GO
Grocery Outlet Holding
9.92
-2.50
-20.13%
ACI
Albertsons Companies
13.59
-7.20
-34.63%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.