Tesco Value?

Wednesday, 10th April 2019 07:38 - by Rajan Dhall

Since the 2014 accounting scandel, Dave Lewis has a job on his hands rebuilding the UK's biggest retailer. The former Unilever man seems to be heading in the right direction as the latest company report would suggest, here are a few of the key metrics:

• 34 percent rise in full-year operating profit to 2.21 billion pounds
• Full-year pre-tax profits were £1.7bn, 9 percent higher
• Group sales rose 11.5 percent to 56.9 billion pounds
• like-for-like sales growth (UK) 1.7 percent increase in the final quarter
• Net debt grew 9 per cent to £2.86bn after the £4bn purchase of Booker

It's been four years since Lewis left Unilever to join Tesco and the Cheif Executive stated that Tesco are on the right track to meet the vast majority of their objectives. Shareholders will be happy this morning as it was announced that the Co. had doubled their dividend to 13.55p and the Co. told investors to expect a final dividend of 4.10p, bringing the full-year dividend to 5.77p.

Looking at the chart now and despite all the positivity the share price is only up 1.4%. The FTSE 100 index is only up 0.01% so far in early trade and global sentiment is lower following the EU-US tariff dispute. On the weekly chart below we seem to be running out of momentum ahead of the 250p resistance level. Having said that support at 217p should be strong as a break there would mean price would enter the previous value are more toward 200p and that would represent quite a discount on the current share price. It seems investors could be looking at this one as a buy on dips kind of scenario, but having said that the retail environment in the UK is still precarious and Tesco is clearly the best of a bad bunch.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.