Tesco PLC : Bet on trading range
By Oscar Salza
Entry price | Target | Stop-loss | Potential |
---|---|---|---|
GBX 316 | GBX 0 | GBX 307.4 | -100% |
Last earnings release showed full year sales up 5.7% to £64.5bn, with diluted earnings per share to 35p up 6% against year previous. These numbers was conformed to management’s guidance. The sales in UK grew 5.5%, the largest company’s market, and 10% in Asia. The growth continues in US, even if weaker than estimates and where the company has a small share of market. The share is trading 9 times earnings estimate for next financial year, according to Thomson Reuters’ consensus, and it is cheaper than average sector, according 4-traders peers.
The share was penalized in January with sharp fell more than 16% in one trading session, after sales results, which has shown weaker numbers related Christmas period’s sales. For this date the stock is trading in neutral trading range between 340 / 310 GBp. At today the share is on the lower band of this range, and could take benefit from technical supports. We suggest to take a long position at current price in order to aim a first target to 340 GBp. In add we forecast on mid-term a return in the area of 400 GBp, seen this value doesn’t reflect the group’s good financial health. We suggest a stop loss at 308 GBp