Tesco profits 2023: a reason to sell stock?

on Apr 13, 2023
  • Tesco PLC says its pre-tax profit halved in fiscal 2023.
  • Shore Capital analyst still recommends buying TSCO.
  • Tesco shares are currently up nearly 20% year-to-date.

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Shares of Tesco PLC (LON: TSCO) ended in the green on Thursday even though the retail giant said its pre-tax profit halved in fiscal 2023.

Shore Capital recommends buying Tesco shares

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The stock remained resilient primarily because the supermarket issued better-than-expected guidance for the future. Tesco expects its retail adjusted operating profit to remain flat this year at about £2.49 billion ($3.11 billion).

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Its outlook was sufficient for a Shore Capital analyst to reiterate his “buy” rating on Tesco PLC. Clive Black dubbed the British multinational an “effective cash compounder” and recommended buying its shares for about an 8.0% free cash flow yield.

Other reasons cited for the bullish view despite weakness in Tesco profits 2023 include the company’s capital discipline and recurring buybacks. On Thursday, the retailer said it will repurchase £750 million worth of is shares over the next twelve months.

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Notable figures in Tesco profits 2023 report

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  • Profit before tax tanked from £2.03 billion to £1.0 billion
  • Revenue including fuel climbed 7.0% YoY to £65.76 billion
  • Retail like-for-like sales went up 5.1% in financial 2023
  • Adjusted operating profit slipped 7.0% to £2.63 billion

Tesco PLC declared 7.05 pence per share of financial dividend on Thursday. In the press release, CEO Ken Murphy said:

We have repositioned our value proposition. Our focus on market share and free cash flow is working. By investing to give customers the best possible value, we’ll create further significant value for every stakeholder in Tesco.

Year-to-date, Tesco shares are up nearly 20%.

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