This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Tesco (first-half figures 4 October)
Tesco is expected to report earnings per share (EPS) of 4.5p, up 50.8% year-on-year, while revenues are expected to grow 3.2% to £28.2 billion. Like-for-like sales are forecast to rise 2.5% for Q2, versus Q1 growth of 2.3%. This would be the seventh consecutive quarter of growth, as the firm benefits from its strategy of holding down prices, even as food inflation rises. A dip in the sales growth of discounters Aldi and Lidl provides further hope, as Tesco’s countermeasures, such as its Farm Brands ranges, help to tempt customers back. At 15.8 times forward earnings the stock is cheaper relative to its two-year average of 19.9 times earnings.
Tesco has broken its downtrend from the 2016 highs, breaking out and then consolidating. It remains constrained by the 190p level and the still-falling 200-day simple moving average (SMA) at 185.7p. A push above 190p would target 195p and then on to 201p. For now, dips to 180p tend to bring out the buyers.