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.