November 7, 2024
Top 10 Stock Tesco Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Tesco – Top 10 Stock in Renewable Energy Use Leaders
Tesco is listed as a top 10 stock on November 07, 2024 in the market index Renewables Users because of its high performance in at least one of the Obermatt investment strategies. While only half of the consolidated Obermatt Ranks exhibit above-average performance, the professional market sentiment is positive and it may be a solid investment proposition, especially if a growth recovery is to be expected soon. Based on the Obermatt 360° View of 78 (top 78% performer), Obermatt assesses an overall strong buy recommendation for Tesco on November 07, 2024.
Snapshot: Obermatt Ranks
| Country | United Kingdom |
| Industry | Food Retail |
| Index | FTSE All Shares, FTSE 100, FTSE 350, Dividends Europe, Employee Focus EU, Human Rights, Low Waste, Renewables Users |
| Size class | XX-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Tesco Strong Buy
| 360 METRICS | November 7, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 71 |
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| GROWTH | ||||||||
| GROWTH | 40 |
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| SAFETY | ||||||||
| SAFETY | 18 |
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| SENTIMENT | ||||||||
| SENTIMENT | 100 |
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| 360° VIEW | ||||||||
| 360° VIEW | 78 |
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ANALYSIS: With an Obermatt 360° View of 78 (better than 78% compared with alternatives) for 2024, overall professional sentiment and financial characteristics for the stock Tesco are very positive. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for Tesco. The consolidated Value Rank has an attractive rank of 71, which means that the share price of Tesco is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means that the stock price is lower than for 71% of alternative stocks in the same industry. The consolidated Sentiment Rank has a good rank of 100, which means that professional investors are more optimistic about the stock than for 100% of alternative investment opportunities. But the consolidated Growth Rank has a low rank of 40, which means that the company exhibits below-average growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. The consolidated Safety Rank has a riskier rank of 18, meaning the company has a riskier financing structure than 82 comparable companies when looking at the amount of its debt, its refinancing requirements, and its ability to service debt. ...read more
RECOMMENDATION: With a consolidated 360° View of 78, Tesco is better positioned than 78% of all alternative stock investment opportunities based on the Obermatt Method. Half of the consolidated Obermatt Ranks exhibit above-average performance, but the other half are below market levels. The company enjoys a good value (Value Rank of 71) and positive market sentiment in the professional investor community (Sentiment Rank of 100), but growth expectations are below-average (Growth Rank of 40) and the financing structure is on the risky side(Safety Rank of 18). This combination is rather dangerous, because high debt levels (low safety) require growth to finance the debt burden. The current low growth level may be temporary, because professionals are actually optimistic (positive sentiment). Good value is sometimes an indication that the company's future is challenging. The below-par growth performance may be the reason for this assessment. Companies with less growth typically have a lower price than fast-growing competitors. Even though professional investor sentiment is strong, we recommend further evaluating whether the future of Tesco is as challenging as the stock's low price suggests. Since the professional community is optimistic, the stock might just be going through a more challenging phase now, indicating that timing might be good now. ...read more
Sentiment Strategy: Professional Market Sentiment for Tesco very positive
ANALYSIS: With an Obermatt Sentiment Rank of 100 (better than 100% compared with alternatives) for 2024, overall professional sentiment and engagement for the stock Tesco is very positive. The Sentiment Rank is based on consolidating four sentiment indicators, with all four indicators above average for Tesco. Analyst Opinions are at a rank of 56 (better than 56% of alternative investments), which means that, currently, stock research analysts tend to recommend a stock investment in the company. Analyst Opinions Change is also positive with a rank of 95, which means that stock research experts are changing their opinions for the better and recommending investing in the company. They are getting more optimistic about stock investments in Tesco. The Professional Investors rank is 96, which means that currently, professional investors hold more stock in this company than in 96% of alternative investment opportunities. Pros tend to favor investing in this company. Finally, Market Pulse has a rank of 92 which means that the current professional news and professional social networks are on the positive side when discussing this company (more positive news than for 92% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 100 (more positive than 100% compared with investment alternatives), Tesco has a reputation among professional investors that is significantly higher than that of its competitors. Since all market sentiment indicators are positive, the professional community highly recommends investment in the company. Does this mean Tesco stocks are a safe investment? Far from it. Even professionals make mistakes. Especially in stock investing, there is a tendency to follow the leaders. Since trees don't grow to the heavens, such positive sentiment may also be interpreted as a danger sign. A lot of optimism can often be a sign of troubles to come, albeit unforeseen by most. ...read more
Value Strategy: Tesco Stock Price Value better than average
ANALYSIS: With an Obermatt Value Rank of 71 (better than 71% compared with alternatives), Tesco shares are more attractively priced than the majority of comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Tesco. Price-to-Sales (P/S) is 53, which means that the stock price compared with what market professionals expect for future sales is lower than for 53% of comparable companies, indicating a good value concerning Tesco's revenue size. The same is valid for expected Price-to-Profits (or Price / Earnings, P/E), more favorable than for 60% of alternatives. It is also positive for expected dividend yields with a Dividend Yield rank of 79 (dividends are expected to be higher than 79% of other stocks). But, compared with other companies in the same industry, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is higher than average, making the stock more expensive. Only 57% of all competitors have an even higher price compared with book capital which puts the Price-to-Capital Rank for Tesco to 43. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 71, is a buy recommendation based on Tesco's stock price compared with the company's operational size and dividend yields. A low level of book capital means that the company has a business that is leaner in assets than its competitors. For instance, the company could be leasing its production facilities or be more focussed on intellectual property, such as its brand and software, which is less visible in its book capital. If that is the case, the three good value ranks for Sales, Profits, and Dividends are reliable indicators for the stock price value. ...read more
Growth Strategy: Tesco Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 40 (better than 40% compared with alternatives), Tesco shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Tesco. Profit Growth has a rank of 50, which means that currently professionals expect the company to grow its profits more than 50% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 67 (above 67% of alternative investments). But Sales Growth has a below the median rank of 16, which means that, currently, professionals expect the company to grow less than 84% of its competitors, and Capital Growth also has a lower rank of 34. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 40, is a hold recommendation for growth and momentum investors. Because revenues and invested capital are the more solid growth indicators, the positive development on the profit side is less relevant. It may have been caused by cost-cutting, which may be a negative growth indicator. Finally, the above-average stock returns recently are a thing of the past and not a good indicator of future returns. Investors should be confident that the cost-cutting initiative leading to higher profits is to benefit the company's future. If not, there is little growth momentum, and investment is only advisable if the Value Ranks suggest a good investment timing for Tesco. ...read more
Safety Strategy: Tesco Debt Financing Safety risky
| SAFETY METRICS | November 7, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 24 |
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| REFINANCING | ||||||||
| REFINANCING | 13 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 59 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 18 |
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ANALYSIS: With an Obermatt Safety Rank of 18 (better than 18% compared with alternatives), the company Tesco has much riskier financing practices than comparable other companies, which means that their overall debt burden is significantly above the industry average. This doesn't mean that the business of Tesco is also risky, it only means that the company is on the riskier side in respect to bankruptcy in case things turn sour, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, with just one indicator above average for Tesco. Liquidity is at 59, meaning the company generates more profit to service its debt than 59% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 13, which means that the portion of the debt that is about to be refinanced is above average. It has more debt in the refinancing stage than 87% of its competitors. Leverage is also high at a rank of 24, which means that the company has an above-average debt-to-equity ratio. It has more debt than 76% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 18 (worse than 82% compared with alternatives), Tesco has a financing structure that is significantly riskier than that of its competitors. High Leverage (a low Obermatt Leverage Rank) is good in good times, because it usually indicates that shareholders get higher returns. The good Liquidity performance of the company is an indicator that this is the case. However, if you expect an economic downturn, you may stay clear of this stock because they have an above-average debt level that needs refinancing soon. ...read more
Combined financial peformance: Tesco Below-Average Financial Performance
| COMBINED PERFORMANCE | November 7, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 71 |
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| GROWTH | ||||||||
| GROWTH | 40 |
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| SAFETY | ||||||||
| SAFETY | 59 |
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| COMBINED | ||||||||
| COMBINED | 34 |
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ANALYSIS: With an Obermatt Combined Rank of 34 (worse than 66% compared with investment alternatives), Tesco (Food Retail, United Kingdom) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Tesco are a good value (attractively priced) with a consolidated Value Rank of 71 (better than 71% of alternatives) but show below-average growth (Growth Rank of 40), and are riskily financed (Safety Rank of 18), which means above-average debt burdens. ...read more
RECOMMENDATION: A Combined Rank of 34, is a hold recommendation based on Tesco's financial characteristics. As the company Tesco's key financial metrics exhibit good value (Obermatt Value Rank of 71) but low growth (Obermatt Growth Rank of 40) and risky financing practices (Obermatt Safety Rank of 18), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 71% of comparable companies, may indicate the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity. ...read more
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