Librarian Capital's Research Library

Librarian Capital's Research Library

Share this post

Librarian Capital's Research Library
Librarian Capital's Research Library
Tesco: Classic "Value" Stock With 10x P/E & 5.8% Dividend Yield

Tesco: Classic "Value" Stock With 10x P/E & 5.8% Dividend Yield

(Preview) Initation of Coverage (TSCO LN) (Buy)

Librarian Capital's avatar
Librarian Capital
Oct 09, 2022
∙ Paid

Share this post

Librarian Capital's Research Library
Librarian Capital's Research Library
Tesco: Classic "Value" Stock With 10x P/E & 5.8% Dividend Yield
Share

Summary

  • Tesco, the largest grocer in the U.K., is a classic "value" stock and a potential opportunity for investors not bearish on the U.K.

  • Shares fell to a new 5-year low last week after H1 FY23 results, and are at 9.6x FY23 consensus EPS and a 5.8% Dividend Yield.

  • EBIT has been in decline and fell 9.8% in H1, but largely as a result of post-COVID normalization and current U.K. macro headwinds.

  • Tesco's U.K. business is strong, holding its market share in groceries and benefiting from growth in its Booker wholesale business.

  • At 199.6p, Tesco is a Buy with forecasted total return of 31% (12.7% annualized) by February 2025, but more suitable for some investors.

Introduction

We review Tesco PLC, the #1 U.K. grocery chain by sales, after shares in London fell to a new 5-year low following the release of H1 FY23 (ending August 31, 2022) on Wednesday (October 5).

Tesco shares are now trading at a 9.6x P/E, a 10%+ Free Cash Flow Yield and a 5.8% Dividend Yield, having fallen 31% year-to-date, despit…

This post is for paid subscribers

Already a paid subscriber? Sign in
© 2025 Librarian Capital
Privacy ∙ Terms ∙ Collection notice
Start writingGet the app
Substack is the home for great culture

Share