Fact based stock research
Tesco (LSE:TSCO)

GB00BLGZ9862

How to read the free 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.

Tesco stock research in summary

tescoplc.com

ANALYSIS: With an Obermatt Combined Rank of 30 (worse than 70% 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 67 (better than 67% of alternatives) but show below-average growth (Growth Rank of 46), and are riskily financed (Safety Rank of 20), which means above-average debt burdens. ...read more

RECOMMENDATION: A Combined Rank of 30, 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 67) but low growth (Obermatt Growth Rank of 46) and risky financing practices (Obermatt Safety Rank of 20), it may be a risky investment, because debt in times of crises can make things worse. The good value, better than 67% 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. Obermatt Premium subscribers can further check the stock’s Sentiment Ranks, which also flow into the Obermatt 360° View for investors. ...read more

Latest Obermatt Ranks


360° View^new
Sentiment Rank^new
Value Rank	n/a
Growth Rank	n/a
Safety Rank	n/a
Combined Rank	n/a

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

This stock has achievements: Top 10 Stock.

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Review the performance ranks of the individual metrics that form each investment strategy.

Research History: Tesco

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	89	97	84	n/a
GROWTH
GROWTH	12	57	41	n/a
SAFETY
SAFETY	17	16	23	n/a
SENTIMENT
SENTIMENT	n/a	79	96	^new
360° VIEW
360° VIEW	n/a	79	83	^new

Most recent update of the stock research: . Financial reporting date used for calculating ranks: . Stock research history is based on the Obermatt Method. The higher the rank, the better Tesco is in the corresponding investment strategy.
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Combined financial peformance in Detail

RESEARCH HISTORY	2021	2022	2023	2024
VALUE
VALUE	89	97	84	n/a
GROWTH
GROWTH	12	57	41	n/a
SAFETY
SAFETY	17	16	23	n/a
COMBINED
COMBINED	15	68	47	n/a

Last update of combined financial performance: . Stock analysis on combined financial performance: The higher the rank of Tesco the better the performance.

Value Metrics in Detail

ANALYSIS: With an Obermatt Value Rank of 67 (better than 67% 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, where half the indicators are below and half above average for Tesco. Price-to-Sales (P/S) is 62, which means that the stock price compared with what market professionals expect for future sales is lower than for 62% of comparable companies, indicating a good value concerning Tesco's revenue size. The same is valid for dividend yields with a Dividend Yield rank of 77, which means that dividends are expected to be higher than for 77% of comparable investments. On the other hand, the Price-to-Book Capital ratio (also referred to as market-to-book ratio) is less favorable than for 53% of alternatives (only 47% of peers have an even higher ratio). The same is valid for the Price-to-Profit (or Price / Earnings, P/E) ratio, which is higher than for 51% of comparable companies, making the stock more expensive compared with the company's expected profit levels. ...read more

RECOMMENDATION: The overall picture with a consolidated Value Rank of 67, is a buy recommendation based on Tesco's stock price compared with the company's operational size and dividend yields. This is a somewhat surprising picture, because it means that profits are low while dividends are high. One interpretation could be that profits are expected to increase, justifying the high dividend payments. But it could also mean that the company desperately keeps the high dividends to avoid a collapsing share price. This would be a rather dangerous constellation. We recommend further analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks, including the 360° View, before making an investment decision, which is especially important in this case, as the financial indicators are inconclusive. ...read more

VALUE METRICS	2021	2022	2023	2024
PRICE VS. REVENUES (P/S)
PRICE VS. REVENUES (P/S)	74	85	61	n/a
PRICE VS. PROFITS (P/E)
PRICE VS. PROFITS (P/E)	95	63	58	n/a
PRICE VS. CAPITAL (Market-to-Book)
PRICE VS. CAPITAL (Market-to-Book)	57	70	45	n/a
DIVIDEND YIELD
DIVIDEND YIELD	96	88	92	n/a
CONSOLIDATED RANK: VALUE
CONSOLIDATED RANK: VALUE	89	97	84	n/a

Last update of Value Rank: . Stock analysis on value ratios: The higher the rank, the lower the value ratio of Tesco; except for dividend yield where the rank is higher, the higher the yield.

Growth Metrics in Detail

ANALYSIS: With an Obermatt Growth Rank of 46 (better than 46% 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 54, which means that currently professionals expect the company to grow its profits more than 54% of its competitors. This is a good sign for shareholders, which is confirmed by an above-average Stock Returns rank of 77 (above 77% of alternative investments). But Sales Growth has a below the median rank of 23, which means that, currently, professionals expect the company to grow less than 77% of its competitors, and Capital Growth also has a lower rank of 42. ...read more

RECOMMENDATION: The overall picture with a consolidated Growth Rank of 46, 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. While momentum is a popular investment factor, the value aspect might be the more important one, in the longer term. We recommend analyzing the stock with Obermatt’s Value, Safety, and Sentiment Ranks to arrive at a 360° View of the stock purchase case, especially since the growth performance is mixed here. ...read more

GROWTH METRICS	2021	2022	2023	2024
REVENUE GROWTH
REVENUE GROWTH	17	8	22	n/a
PROFIT GROWTH
PROFIT GROWTH	31	83	53	n/a
CAPITAL GROWTH
CAPITAL GROWTH	n/a	52	38	n/a
STOCK RETURNS
STOCK RETURNS	37	63	74	n/a
CONSOLIDATED RANK: GROWTH
CONSOLIDATED RANK: GROWTH	12	57	41	n/a

Last update of Growth Rank: . Stock analysis on growth metrics: The higher the rank, the higher the growth and returns of Tesco.

Safety Metrics in Detail

ANALYSIS: With an Obermatt Safety Rank of 20 (better than 20% 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 53, meaning the company generates more profit to service its debt than 53% of its competitors. This indicates that the company is safer when it comes to debt service. But Refinancing is riskier at a rank of 15, 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 85% of its competitors. Leverage is also high at a rank of 29, which means that the company has an above-average debt-to-equity ratio. It has more debt than 71% of its competitors. ...read more

RECOMMENDATION: With a consolidated Safety Rank of 20 (worse than 80% 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. If the company is sailing with good winds, as may be visible from the Growth and Sentiment performance, the refinancing risk may be lower than the low Refinancing rank suggests. ...read more

SAFETY METRICS	2021	2022	2023	2024
LEVERAGE
LEVERAGE	37	32	27	n/a
REFINANCING
REFINANCING	9	9	16	n/a
LIQUIDITY
LIQUIDITY	39	46	54	n/a
CONSOLIDATED RANK: SAFETY
CONSOLIDATED RANK: SAFETY	17	16	23	n/a

Last update of Safety Rank: . Stock analysis on safety metrics: The higher the rank, the lower the leverage of Tesco and the more cash is available to service its debt.

Sentiment Metrics in Detail

SENTIMENT	2021	2022	2023	2024
ANALYST OPINIONS
ANALYST OPINIONS	n/a	48	64	^new
OPINIONS CHANGE
OPINIONS CHANGE	n/a	90	87	^new
PRO HOLDINGS
PRO HOLDINGS	n/a	34	78	^new
MARKET PULSE
MARKET PULSE	n/a	60	71	^new
CONSOLIDATED RANK: SENTIMENT
CONSOLIDATED RANK: SENTIMENT	n/a	79	96	^new

Last update of Sentiment Rank: . Stock analysis on sentiment metrics: The higher the rank, the more positive the sentiment for Tesco.
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