Shore Capital stays at 'hold' on Tesco following H1 earnings

8th Oct 2026 12:02

(Sharecast News) - Shore Capital said on Thursday that Tesco had delivered a resilient first‑half performance in a UK grocery market that tightened over the summer, with the grocery chain posting 1.6% constant‑currency sales growth and a 6.3% rise in adjusted underlying earnings.

The broker, which has a 480p target price on the stock, noted Tesco had been more active on promotions than expected earlier in the year but continued to show strong cash discipline, supporting a 5.2% increase in the interim dividend and an expanded £950m buyback.

While Shore welcomed Tesco's decision to lift the lower end of FY27 guidance to £3.15bn to £3.30bn, it cautioned that festive trading was likely to be highly competitive and reiterated its 'hold' rating.

Tesco reported group sales of £33.8bn, excluding VAT and fuel, with adjusted underlying earnings rising to around £1.78bn. Free cash flow increased 21% year‑on‑year to £1.57bn, helped by a £250m timing benefit, while net debt stood at £10bn, modestly higher year‑on‑year but below the FY26 year‑end level. Adjusted earnings per share rose 12.2% to 17.3p.

The FTSE 100-listed firm also maintained guidance for £1.5bn to £2bn free cash flow and now expects capital expenditure of around £1.7bn, up £100m. Shore kept its FY27 trading‑profit estimate at £3.22bn and left pre-tax profit and earnings per share forecasts unchanged.

Reporting by Iain Gilbert at Sharecast.com