Tesco (LON:TSCO) Announces Quarterly Earnings Results

Tesco (LON:TSCO) released its quarterly earnings data on Thursday. The retailer reported GBX 17.50 earnings per share for the quarter, Digital Look Earnings reports. Tesco had a net margin of 2.53% and a return on equity of 16.45%.

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 Stock Up 1.3%

Shares of Tesco stock traded up GBX 6.30 on Friday, hitting GBX 506.70. The company had a trading volume of 39,045,453 shares, compared to its average volume of 39,791,203. The stock has a 50-day moving average of GBX 470.29 and a 200-day moving average of GBX 468.96. The company has a debt-to-equity ratio of 127.34, a current ratio of 0.62 and a quick ratio of 0.60. Tesco has a twelve month low of GBX 411.70 and a twelve month high of GBX 520.60. The firm has a market capitalization of £31.56 billion, a P/E ratio of 18.70, a P/E/G ratio of 1.43 and a beta of 0.57.

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 and raised the lower end of its fiscal 2027 outlook as sales and profitability improved. Tesco First-Half Adjusted Operating Profit Rises
• Positive Sentiment: The retailer increased its planned fiscal 2027 share-buyback allocation to £950 million. Buybacks can support earnings per share and signal management confidence in cash generation. Tesco Hikes Share Buybacks
• Positive Sentiment: Deutsche Bank raised its price target from GBX 525 to GBX 550 and upgraded Tesco to “buy,” adding to the bullish interpretation of the earnings update.
• Positive Sentiment: Tesco appointed Wendy Becker as a non-executive director, effective November 1, strengthening the board with an experienced retail and technology executive. Tesco Appoints Wendy Becker
• Neutral Sentiment: Shore Capital and Jefferies both maintained “hold” ratings with GBX 480 price targets, showing that some analysts view the recent rally and improved outlook as largely reflected in the valuation.
• Negative Sentiment: Tesco expects a consumer moderation trend to reduce festive alcohol sales, creating a potential headwind for seasonal revenue and comparable-store growth. Tesco Expects Moderation Trend to Curb Festive Alcohol Sales

Analyst Upgrades and Downgrades

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

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.