Today I am looking at the investment prospects of two FTSE 100 giants, prior to this week’s updates.

Bag a luxury bargain

Market appetite for upmarket raincoat and handbag play Burberry (LSE: BRBY) has enjoyed a welcome up-tick in recent days, ahead of latest numbers due for release tomorrow (Thursday, 14 January).

The company has seen its share price fall a whopping 33% during the past year, as its stores in China have struggled. But regardless of what tomorrow’s numbers may reveal, I reckon Burberry remains a terrific long-term stock selection, as stomping consumer spending power in these lucrative territories blasts revenues through the roof.

Burberry is anticipated to swallow a rare 6% drop in earnings in the 12 months to March 2015 thanks to falling sales more recently. But this figure still leaves the company dealing on a P/E rating of 16.3 times, just above the watermark of 15 times that signals brilliant value.

Few clothing brands can boast the allure of Burberry with rich, fashion-conscious shoppers the world over. And once current economic bumpiness in Asia erodes, I fully expect the company’s pan-global presence to deliver stunning gains in the coming years.

Past its best-before date

Shares in grocery goliath Tesco (LSE: TSCO) have also received a handy boost in recent days, with investor sentiment helped in no small part by sector peer Morrisons’ better-than-expected Christmas results. Indeed, Tesco has seen its stock value advance 14% during the past week.

Investors have latched onto Tesco again in the hope that its Bradford-based rival’s latest performance could herald a much-awaited turnaround for the country’s embattled established chains. Morrisons announced that like-for-like sales edged 0.2% higher in the nine weeks to January 3rd, the first revenues uptick for more than a year.

But one swallow doesn’t make a summer, and Tesco and its peers still face a mounting barrage from the discounters like Aldi and Lidl, chains whose cumulative market share now stands around a record 10% thanks to their smash-and-grab raid on the country’s largest supermarkets.

These competitive pressures were underlined by Sainsbury’s latest set of results today, which showed underlying sales slip 0.4% year-on-year during the 15 weeks to January 9th. This was marginally better than forecast but hardly reason to get the champagne corks popping.

The market will now have its eyes peeled for Tesco’s next release — also due tomorrow — to see if it can also surpass broker forecasts for the Yuletide season.

But regardless of the Cheshunt operator’s holiday performance, I still believe the long-term risks continue to outweigh the potential rewards on offer. Chief executive Dave Lewis and his team remain helpless to stop the firm’s market share steadily eroding, a sustained commitment to slashing prices achieving little but casting a pall over future earnings generation.

Indeed, Tesco is expected to endure a 45% earnings slip in the year to March 2016, creating a ridiculously-elevated P/E rating of 34.4 times. Given that both budget and premium supermarkets are aggressively expanding their physical and on-line operations, I am sure profits should continue to steadily erode at Tesco and its mid-tier FTSE peers.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Burberry. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.