Tesco (LON:TSCO) Posts Quarterly Earnings Results

Tesco (LON:TSCO) posted its quarterly earnings data on Thursday. The retailer reported GBX 17.50 earnings per share (EPS) for the quarter, Digital Look Earnings reports. Tesco had a return on equity of 16.05% and a net margin of 2.42%.

Here are the key takeaways from Tesco’s conference call:

• Strong first-half financial performance: Group sales rose 1.6% at constant rates, adjusted operating profit increased 6.3%, EPS grew 12.2%, and free cash flow reached £1.57 billion. Tesco raised its share buyback by £200 million to £950 million.
• Tesco narrowed its full-year adjusted operating profit outlook to the upper half of the previous £3.15 billion–£3.3 billion range, supported by resilient consumers, cost savings, favorable product mix, and growth in Tesco Media and Whoosh.
• Digital and rapid-delivery operations showed strong momentum, with U.K. online like-for-like sales up 8.4% and Whoosh sales up about 37%–40%. Partnerships with Uber Eats and Deliveroo are attracting new customers with lower-than-expected cannibalization.
• Customer satisfaction reached a record high, while Tesco continued investing in value, quality, colleague pay, and innovation. Clubcard personalization expanded to roughly 2.5 million customers, and more than 800 new or improved products were launched.
• Tesco increased full-year capital expenditure guidance to approximately £1.7 billion, around £200 million above last year, while management cautioned that the second half faces uncertainty from the U.K. budget, higher energy bills, Christmas trading, and potential cost inflation.

Tesco Price Performance

Shares of Tesco stock opened at GBX 507.20 on Friday. The company has a quick ratio of 0.60, a current ratio of 0.59 and a debt-to-equity ratio of 131.55. Tesco has a 52 week low of GBX 411.70 and a 52 week high of GBX 520.60. The stock’s 50-day simple moving average is GBX 469.95 and its 200-day simple moving average is GBX 468.70. The company has a market capitalization of £31.59 billion, a price-to-earnings ratio of 18.72, a PEG ratio of 1.43 and a beta of 0.57.

Analyst Upgrades and Downgrades

Several research analysts recently issued reports on TSCO shares. Jefferies Financial Group reiterated a “hold” rating and issued a GBX 480 price target on shares of Tesco in a research note on Thursday. Shore Capital Group restated a “hold” rating and issued a GBX 480 target price on shares of Tesco in a report on Thursday. JPMorgan Chase & Co. reduced their price objective on Tesco from GBX 500 to GBX 490 and set an “overweight” rating for the company in a research report on Wednesday, September 2nd. Finally, Deutsche Bank Aktiengesellschaft raised their price objective on shares of Tesco from GBX 525 to GBX 550 and gave the stock a “buy” rating in a report on Friday. Two research analysts have rated the stock with a Buy rating and two have issued a Hold rating to the company. According to MarketBeat.com, Tesco presently has a consensus rating of “Moderate Buy” and a consensus price target of GBX 500.

Tesco News Roundup

Here are the key news stories impacting Tesco this week:

• Positive Sentiment: Tesco reported a 6.3% increase in first-half adjusted operating profit to £1.78 billion, supported by sales growth. Management raised the lower end of its fiscal 2027 outlook, reinforcing confidence in earnings momentum. Tesco First-Half Adjusted Operating Profit Rises
• Positive Sentiment: The retailer increased its total fiscal 2027 share-buyback allocation to £950 million. The expanded capital return should support earnings per share and signals confidence in Tesco’s balance sheet and cash generation. Tesco Hikes Total Allocation for FY27 Share Buybacks
• Positive Sentiment: Deutsche Bank raised its price target from GBX 525 to GBX 550 and upgraded Tesco to “buy,” adding further analyst support after the results.
• Positive Sentiment: Tesco was among the stronger performers as broader British equities weakened amid bond-market selling and higher oil prices, suggesting company-specific optimism outweighed wider market pressure. British Stocks Fall on Bond Market Selloff, Oil Price Surge
• Neutral Sentiment: Wendy Becker will join Tesco’s board as a non-executive director on November 1. Her experience strengthens governance, although the appointment is unlikely to materially affect near-term earnings.
• Neutral Sentiment: Jefferies and Shore Capital both reaffirmed “hold” ratings with GBX 480 price targets, creating a more cautious counterpoint to Deutsche Bank’s bullish upgrade.
• Negative Sentiment: Tesco expects moderation and changing consumer behavior to weigh on festive alcohol sales, presenting a potential headwind for seasonal revenue and margins. Tesco Expects Moderation Trend to Curb Festive Alcohol Sales

About Tesco

Tesco was built to be a champion for customers, serving them every day with affordable, healthy and sustainable food. Across the Group, our purpose is at the core of what we do: serving our customers, communities and planet a little better every day.
Our fantastic team of over 340,000 colleagues go above and beyond to serve our customers. We work hard to be a place where everyone is welcome, where all colleagues can be at their best and build the skills to grow their careers.