ShrutiAggarwal
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Insights for October 2017

Posted by ShrutiAggarwal on 27 October 2017, 7:15 AM

Tesco Plc, a Hold at the current levels

Topics: Analysis
Other Insights on Related Shares: TSCO.L
Related Shares: Tesco Share Price

Tesco Plc. is a hold at the current price levels as the stock has had a spectacular rally since July this year and it looks like the rally shall continue! The stock finished trading on the London Stock exchange on 24th October at 188.0p a share, up by 0.3%.  The company announced its half yearly 2018 results on 4th October and the stock was down by nearly 5% the same day. However, the next day onwards the sentiment picked up and stock has been again rising. In terms of technical analysis or charting, the stock has been trading on the upward trend line for the last four months. Currently, the stock has been trading above its 20 day moving average (DMA), 50 DMA and 100 DMA of 186p, 184p and 179p respectively. The stock has been nonstop making higher highs and lower lows which further confirm the bullish trend of the stock. The immediate support and resistance of the stock is seen at 185p and 190p respectively. Any breakout above 190p would take the stock up to 215p.  Therefore, traders or investors need to keep an eye at the respective levels and accordingly hedge their positions.

Let’s throw some light on the latest financial results of the company.  The company’s H1’18 revenue is up by 3.3% year on year. Operating profit before non-recurring items is up by 27% year on year. The operating margin in H1’18 was 2.7% versus 2.2% in H1’17. As per the management, the debt would be reduced thereby strengthening the balance sheet and cash flows would also improve. Going forward, the management expects the capital expenditure to remain between £1.1bn and £1.4bn per year. The company has also proposed a merger with Booker and is currently undergoing the due diligence. Therefore, the company would continue to report organic growth as well. (Read more)

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