Financial Analysis: Tesco (TSCDY) versus Its Peers

Tesco (OTCMKTS: TSCDY) is one of 14 publicly-traded companies in the “Variety stores” industry, but how does it compare to its peers? We will compare Tesco to related businesses based on the strength of its dividends, profitability, earnings, risk, valuation, analyst recommendations and institutional ownership.

Analyst Ratings

This is a summary of current recommendations for Tesco and its peers, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Tesco 0 2 2 0 2.50
Tesco Competitors 257 1636 2086 113 2.50

As a group, “Variety stores” companies have a potential upside of 6.89%. Given Tesco’s peers stronger consensus rating and higher possible upside, analysts plainly believe Tesco has less favorable growth aspects than its peers.

Earnings and Valuation

This table compares Tesco and its peers gross revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
Tesco $74.07 billion $1.58 billion 19.89
Tesco Competitors $65.04 billion $1.20 billion 26.89

Tesco has higher revenue and earnings than its peers. Tesco is trading at a lower price-to-earnings ratio than its peers, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares Tesco and its peers’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Tesco N/A N/A N/A
Tesco Competitors 2.62% 11.55% 6.34%

Risk and Volatility

Tesco has a beta of 0.61, suggesting that its stock price is 39% less volatile than the S&P 500. Comparatively, Tesco’s peers have a beta of 0.84, suggesting that their average stock price is 16% less volatile than the S&P 500.

Dividends

Tesco pays an annual dividend of $0.13 per share and has a dividend yield of 1.4%. Tesco pays out 28.3% of its earnings in the form of a dividend. As a group, “Variety stores” companies pay a dividend yield of 1.6% and pay out 33.9% of their earnings in the form of a dividend.

Insider & Institutional Ownership

0.1% of Tesco shares are owned by institutional investors. Comparatively, 76.3% of shares of all “Variety stores” companies are owned by institutional investors. 13.8% of shares of all “Variety stores” companies are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Tesco peers beat Tesco on 12 of the 15 factors compared.

About Tesco

Tesco Plc engages in the retail industry. It operates through the following segments: Retailing and Associated Activities; and Retail Banking and Insurance Services. The Retailing and Associated Activities segment includes the United Kingdom (UK) and Republic of Ireland (ROI); Central Europe; and Asia. The Retail Banking and Insurance Services segment engages in the provision of retail banking and insurance services through Tesco Bank. The company was founded by John Edward Cohen in 1919 and is headquartered in Welwyn Garden City, the United Kingdom.

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