Tesco (LON:TSCO) Announces Quarterly Earnings Results

Key Points

• Tesco delivered strong results with group adjusted operating profit of £3.15 billion, revenue of GBX 7,371 million, headline EPS up 6%, free cash flow of £1.96 billion and a new £750 million share buyback while upgrading its medium‑term FCF target to £1.5–2.0 billion.
• Customer metrics improved materially—Tesco reported its highest UK market share in a decade (28.5%) and rising Net Promoter Scores—and management is refocusing on five strategic ambitions, including investments in AI/digital (dunnhumby), retail media, Whoosh and Marketplace to drive capital‑light growth.
• Management warned of sustained competitive intensity and the Middle East conflict, widening FY adjusted operating profit guidance to £3.0–3.3 billion; shares rose ~3.6% and analysts show a consensus “Moderate Buy” with an average target of GBX 465.

Tesco (LON:TSCO - Get Free Report) issued its quarterly earnings results on Thursday. The retailer reported GBX 29.50 earnings per share for the quarter, Digital Look Earnings reports. Tesco had a net margin of 2.14% and a return on equity of 13.57%. The company had revenue of GBX 7,371 million during the quarter.

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

• Customer metrics improved materially — Tesco reported its highest market share in a decade (UK 28.5%) and rising Net Promoter Scores, which management says drove sustained volume growth and helped deliver results ahead of expectations.
• Strong financial delivery: group adjusted operating profit of £3.15 billion, headline EPS up 6%, free cash flow of £1.96 billion (12% y/y), an upgraded medium‑term FCF target of £1.5–2.0 billion, and a new £750 million share buyback (total returns this year £2.4bn).
• Management is evolving strategy into five ambitions focused on winning in food and building capital‑light growth engines — investments in AI/digital (dunnhumby), retail media, Whoosh (now >£400m sales) and Marketplace are highlighted as future revenue and margin drivers.
• Risk and uncertainty remain: management flagged sustained competitive intensity and the Middle East conflict as reasons for a wider FY guidance range (group adjusted operating profit guidance of £3.0–3.3 billion) and warned these factors could pressure costs or consumer demand.

Tesco Trading Up 3.6%

Shares of LON:TSCO opened at GBX 488.75 on Thursday. Tesco has a 12-month low of GBX 343.60 and a 12-month high of GBX 508.20. The stock has a market cap of £31.06 billion, a PE ratio of 21.53, a P/E/G ratio of 1.43 and a beta of 0.61. The business has a 50 day moving average of GBX 476.61 and a 200-day moving average of GBX 454.73. The company has a quick ratio of 0.60, a current ratio of 0.60 and a debt-to-equity ratio of 138.46.

Analyst Ratings Changes

TSCO has been the subject of a number of analyst reports. Jefferies Financial Group reaffirmed a "hold" rating and issued a GBX 430 target price on shares of Tesco in a research report on Thursday. Deutsche Bank Aktiengesellschaft reduced their price objective on shares of Tesco from GBX 500 to GBX 490 and set a "buy" rating for the company in a research note on Thursday, January 8th. JPMorgan Chase & Co. dropped their target price on Tesco from GBX 500 to GBX 480 and set a "buy" rating on the stock in a report on Monday, January 12th. Finally, Shore Capital Group reiterated a "buy" rating on shares of Tesco in a research note on Thursday. Four equities research analysts have rated the stock with a Buy rating and one has assigned a Hold rating to the company's stock. According to data from MarketBeat, the stock presently has a consensus rating of "Moderate Buy" and an average target price of GBX 465.

About Tesco

Tesco was built to be a champion for customers, serving them every day with affordable, healthy and sustainable food. Our commitment to our customers extends beyond our stores, and into every community we serve – in the UK, Republic of Ireland, Slovakia, the Czech Republic and Hungary. We invest in communities to help them thrive, through supporting schools and children's groups, food banks and other good causes. In challenging times, our purpose has guided every part of the Group. Serving our customers, communities and planet a little better every day is what we do.

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