Will Wednesday’s Full Year Results Be Tesco’s Finest?
Spreadex | Apr 04, 2019 11:51
After a really rough second half of 2018, the UK’s leading supermarket has seen a serious rebound in 2019. From an opening price of £1.89, the company hit a near 6-month peak of £2.39 towards the end of March, matching the kind of rise posted by the FTSE itself. Tesco (LON:TSCO) PLC now sits at a current trading price of £2.35, a 24% increase on its New Year starting point.
A big reason for the firm’s strong 2019 showing was January’s trading update, where Tesco posted its best Christmas performance for 10 years. UK like-for-like sales rose 2.2% over the 6 week holiday period to January 5th, with overall group LFLs up 1.5%.
That was a significant improvement on what was a tough third quarter, one that saw UK like-for-like growth shrink to just 0.7%, less than a third of what was managed in the first half of the financial year. This meant that for total 19 week reporting period comparable sales were up 1.2% in the UK, and 0.8% for the group as a whole.
These results saw Tesco far outshine its peers; in comparison Sainsbury's (LON:SBRY) saw a 1.1% like-for-like decline over Christmas, while Morrisons (LON:MRW) could only manage a 0.6% increase in its retail arm.
If Tesco is to avoid disappointing investors on Wednesday, then it needs its fourth quarter like-for-likes to be closer to its Christmas performance, rather than the sharp slowdown incurred across Q3. As for its full year forecasts, analysts are expecting a 12% rise in group revenue (excluding VAT, including fuel) to £64.5 billion, alongside a 21.7% surge in statutory pre-tax profit to £1.58 billion.
Tesco PLC has a consensus rating of ‘Buy’ alongside an average target price of £2.69.
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