Tesco (TSCDY) AI Stock Analysis

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Tesco

(OTC:TSCDY)

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Outperform 74 (OpenAI - 4o)

Rating:74Outperform

Price Target:

$20.00

▲(11.17% Upside)

Tesco's overall stock score is driven by strong financial performance and positive technical indicators. The earnings call provided a boost with its positive outlook, despite some challenges. Valuation concerns slightly dampen the score, but the company's strategic initiatives and market position remain strong.

Positive Factors

Market Share Gains

Tesco's increasing market share in the UK demonstrates its strong competitive position and ability to attract and retain customers, which is crucial for long-term growth and stability.

Strong Cash Generation

Robust cash generation enhances Tesco's financial flexibility, allowing for strategic investments and shareholder returns, supporting sustainable growth.

Sustainability Initiatives

Tesco's focus on sustainability aligns with consumer trends and regulatory expectations, potentially reducing long-term operational risks and enhancing brand reputation.

Negative Factors

Net Debt Increase

Rising net debt levels can strain Tesco's financial resources, limiting its ability to invest in growth opportunities and potentially impacting its credit profile.

Operating Cost Pressures

Increased operating costs and regulatory levies can erode profit margins, challenging Tesco's ability to maintain profitability in a competitive market.

Challenges in Central Europe

Competitive pressures and declining rental income in Central Europe could hinder Tesco's regional performance, affecting overall profitability and growth prospects.

Tesco (TSCDY) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$35.48B

Dividend Yield3.08%

Average Volume (3M)42.99K

Price to Earnings (P/E)18.5

Beta (1Y)<0.01

Revenue Growth4.52%

EPS Growth-17.11%

CountryUS

Employees340,000

SectorConsumer Defensive

Sector Strength42

IndustryGrocery Stores

Share Statistics

EPS (TTM)0.62

Shares Outstanding2,129,487,800

10 Day Avg. Volume0

30 Day Avg. Volume42,989

Financial Highlights & Ratios

PEG Ratio-4.04

Price to Book (P/B)2.25

Price to Sales (P/S)0.38

P/FCF Ratio15.67

Enterprise Value/Market Cap1.15

Enterprise Value/Revenue0.49

Enterprise Value/Gross Profit6.73

Enterprise Value/Ebitda6.79

Forecast

1Y Price TargetN/A

Price Target UpsideN/A

Rating ConsensusN/A

Number of Analyst Covering0

EPS Forecast (FY)1.13

Revenue Forecast (FY)$96.68B

Tesco Business Overview & Revenue Model

Company DescriptionTesco PLC is a British multinational grocery and general merchandise retailer, headquartered in Welwyn Garden City, England. It operates in several sectors, primarily focusing on retail through its supermarket chain, which is one of the largest in the world. Tesco offers a wide range of products including groceries, clothing, electronics, and household items. The company also provides various services such as banking and mobile services through its subsidiaries, catering to millions of customers across the UK and internationally.

How the Company Makes MoneyTesco generates revenue through multiple streams, primarily from the sale of goods in its supermarkets and hypermarkets. The company's core revenue comes from food and grocery sales, which are complemented by non-food items and general merchandise. Additionally, Tesco earns income from its online shopping platform, offering home delivery and click-and-collect services. Another significant revenue source is Tesco Bank, which provides financial products and services, including personal loans, insurance, and credit cards. Partnerships with suppliers and brands also play a crucial role in its earnings, as Tesco leverages these relationships to enhance product offerings and promotions. Moreover, the company has been focusing on cost efficiencies and improving its supply chain to boost profitability.

Tesco Key Performance Indicators (KPIs)

Any

Adjusted Operating Profit by Segment

Adjusted Operating Profit by Segment
Reveals profitability across different business areas, highlighting which segments drive earnings and where operational improvements or challenges exist.

Chart InsightsTesco's UK & ROI segment shows a robust recovery, reaching new highs, indicating strong domestic performance. Central Europe is stabilizing after a dip, but remains a concern with fluctuating profits. The Asia segment remains inactive, suggesting a strategic exit or restructuring. Tesco Bank, after a volatile period, is showing signs of stabilization, though recent fluctuations suggest caution. Overall, Tesco's focus on core markets is yielding positive results, but regional disparities highlight the need for strategic adjustments.

Data provided by:

The Fly

Tesco Earnings Call Summary

Earnings Call Date:Oct 02, 2025

(Q2-2026)

% Change Since: |

Next Earnings Date:Apr 16, 2026

Earnings Call Sentiment Positive

The earnings call reflects a strong performance with significant revenue growth, market share gains, and enhanced customer engagement. However, challenges such as increased net debt and operating cost pressures were noted.

Q2-2026 Updates

Positive Updates

Overall Revenue Growth

Group sales grew by 5.1% with growth in all operating segments, and adjusted operating profit increased by 1.6%.

Market Share Gains

Tesco continued to grow market share in the UK, now over 28%, and achieved consistent gains for over 2 years.

Strong Online Performance

UK online sales grew by 11.4%, with a market share gain of 112 basis points, and the Whoosh rapid delivery service grew by 60%.

Net Promoter Score Improvement

Net Promoter Score reached its highest level in 6 years, indicating improved customer satisfaction.

Clubcard Engagement

Clubcard penetration is around 85% across the group, with new partnerships and benefits enhancing customer engagement.

Sustainability Initiatives

Continued investment in sustainability, including procurement of renewable electricity and initiatives to support UK farming.

Strong Cash Generation

GBP 1.3 billion of free cash flow was generated in the half, with a buyback program returning half of the GBP 700 million proceeds from the sale of banking operations.

Negative Updates

Net Debt Increase

Net debt was GBP 9.88 billion at the end of the half, an increase of GBP 430 million versus year-end.

Operating Cost Pressures

Operating cost inflation and new levies such as the EPR levy impacted profit margins.

Challenges in Central Europe

Central Europe adjusted operating profit was down GBP 5 million due to competitive pressures and lower rental income.

Booker Tobacco Decline

Continued decline in the tobacco market affected Booker's overall sales growth.

Company Guidance

In the recent call, the company reported a solid financial performance for the first half of the fiscal year 2026, driven by strategic investments and customer satisfaction. Group sales increased by 5.1%, with a 4.3% rise in like-for-like sales and a 1.6% increase in adjusted operating profit. The company highlighted its robust market share gains, with the U.K. market share now exceeding 28%. Notably, the company has seen a 16% year-on-year growth in its Finest range, marking three consecutive years of double-digit growth. The Net Promoter Score reached its highest level in six years, reflecting improved customer satisfaction. Furthermore, the company reported a free cash flow of GBP 1.3 billion and adjusted its full-year group adjusted operating profit guidance to a range of GBP 2.9 billion to GBP 3.1 billion. Investments in value, quality, and service, alongside a focus on price competitiveness, have been key drivers of their performance.

Tesco Financial Statement Overview

Summary

Tesco demonstrates strong financial performance with consistent revenue growth and improving profitability. The balance sheet is stable, though leverage needs monitoring. Cash flow management is robust, but declining free cash flow is a concern.

Income Statement

Tesco's income statement shows solid revenue growth over the years, with a Total Revenue increase from 2024 to 2025 by 2.54%. The Gross Profit Margin for 2025 stands at 7.22%, indicating efficient cost management. The Net Profit Margin improved to 2.33% in 2025, reflecting enhanced profitability. EBIT and EBITDA margins are strong at 3.88% and 6.82%, respectively, demonstrating operational efficiency. Overall, Tesco is on a positive trajectory with consistent revenue growth and improving margins.

Balance Sheet

Tesco's balance sheet indicates a stable financial position with a Debt-to-Equity Ratio of 1.26, reflecting a moderate level of leverage. Return on Equity (ROE) improved to 13.94% in 2025, highlighting effective use of equity capital. The Equity Ratio is 29.98%, demonstrating a balanced capital structure. While leverage remains a potential risk, Tesco's equity base and ROE suggest strong shareholder returns.

Cash Flow

Tesco's cash flow position shows a decrease in Free Cash Flow from 2024 to 2025 by -43.65%, which could be a concern. The Operating Cash Flow to Net Income Ratio is 1.80 in 2025, indicating strong cash generation relative to net income. However, the Free Cash Flow to Net Income Ratio dropped to 0.85, suggesting potential cash flow challenges. Overall, while Tesco generates solid operating cash, the drop in free cash flow warrants attention.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	83.15B	69.92B	68.19B	65.76B	61.34B	57.89B
Gross Profit	6.05B	5.05B	4.66B	4.68B	4.69B	3.86B
EBITDA	6.00B	4.77B	4.83B	3.23B	4.40B	3.10B
Net Income	1.84B	1.63B	1.19B	737.00M	1.48B	690.00M
Balance Sheet
Total Assets	39.51B	38.84B	47.04B	46.13B	49.35B	45.51B
Cash, Cash Equivalents and Short-Term Investments	4.59B	4.48B	4.67B	4.45B	4.65B	3.70B
Total Debt	14.97B	14.67B	14.84B	15.08B	15.36B	15.67B
Total Liabilities	28.71B	27.23B	35.37B	33.90B	33.71B	33.45B
Stockholders Equity	10.81B	11.67B	11.67B	12.24B	15.66B	12.08B
Cash Flow
Free Cash Flow	2.51B	1.68B	2.73B	2.56B	2.61B	-737.00M
Operating Cash Flow	4.07B	2.92B	3.84B	3.81B	3.79B	640.00M
Investing Cash Flow	-1.71B	-441.00M	-1.70B	-790.00M	-1.77B	6.13B
Financing Cash Flow	-3.68B	-2.94B	-1.86B	-3.19B	-2.23B	-7.84B

Tesco Technical Analysis

Technical Analysis Sentiment

Negative

Last Price17.99

Price Trends

50DMA

17.89

Negative

100DMA

17.72

Negative

200DMA

16.41

Positive

Market Momentum

MACD

>-0.01

Positive

RSI

35.16

Neutral

STOCH

60.16

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSCDY, the sentiment is Negative. The current price of 17.99 is above the 20-day moving average (MA) of 17.80, above the 50-day MA of 17.89, and above the 200-day MA of 16.41, indicating a neutral trend. The MACD of >-0.01 indicates Positive momentum. The RSI at 35.16 is Neutral, neither overbought nor oversold. The STOCH value of 60.16 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative 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

Overall Rating

UnderperformOutperform

Sector (62)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TSCDY	74 Outperform	$35.48B	18.52	13.43%	3.08%	4.52%	-17.11%
SFM	69 Neutral	$7.51B	14.93	36.96%	―	16.60%	49.76%
WMK	67 Neutral	$1.62B	17.19	7.22%	2.06%	3.11%	6.54%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
KR	56 Neutral	$37.84B	54.51	7.75%	2.15%	-1.77%	-70.83%
ACI	54 Neutral	$8.55B	10.73	29.65%	3.49%	2.08%	-1.63%
GO	52 Neutral	$937.21M	-200.63	-0.37%	―	7.22%	-108.99%

* Consumer Defensive Sector Average

Performance Comparison

TSCDY

Tesco

17.02

4.38

34.63%

Kroger Company

59.79

1.49

2.56%

WMK

Weis Markets

65.59

0.39

0.60%

SFM

Sprouts Farmers

77.09

-61.53

-44.39%

Grocery Outlet Holding

9.55

-7.18

-42.92%

ACI

Albertsons Companies

16.63

-3.43

-17.09%

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.Date of analysis: Oct 09, 2025