Whatever you may think of battle-weary Tesco’s (LSE: TSCO) long-term investors — may it be  brave, visionary, or indeed foolish — there’s one quality that undoubtedly sums them up, and that’s resilient.

Many shareholders continue to cling to the supermarket in spite of worsening conditions in the British grocery space. Indeed, latest Nielsen statistics showed sales at Lidl and Aldi up 16.7% and 16% in the 12 weeks to 26 March, a stark contrast to Tesco’s 0.1% revenues advance.

But the Cheshunt firm isn’t only being beaten by the low-price specialists — indeed, the 2.9% sales increase at Waitrose, and 4.2% rise over at Marks & Spencer during the three months to the end of March, illustrates the battle Tesco has on its hands to retain the more affluent members of its customer base.

Market share slides

On the one hand Tesco’s move back into the black should be greeted with some cheer. Not only did March’s release mark the fourth successive quarterly improvement, but this was also the supermarket’s best performance since November 2013.

Still, this couldn’t prevent Tesco’s market share from sliding further, to 27.4% from 27.8% a year earlier. And I believe Tesco is facing an uphill task to keep its dominance from evaporating further as its rivals rapidly expand.

According to Barbour ABI data compiled for The Telegraph, Aldi  lodged 101 planning applications last year for new supermarkets, while Lidl filed 48. By comparison Tesco lodged just seven applications, the company concentrating more on closing scores of underperforming mega- and convenience stores than expanding its retail base.

And Tesco faces an assault in the white-hot online segment, too. Morrisons has recently announced plans to team up with Amazon; Aldi has started selling wine to internet customers; and Sainsbury’s has recruited 150 new ‘digital’ employees to enhance its existing internet presence.

A pricey pick

Given this backcloth it comes as a surprise — well to me, at least — that the City expects Tesco to rise like the mythical phoenix from the flames in the months ahead.

Indeed, current consensus suggests that the supermarket will recover from a fifth consecutive earnings drop in the 12 months to February 2016, to 2.8p per share, with a bounce to 7.8p per share in the current fiscal year.

However, this forecast leaves Tesco changing hands on a P/E ratio of 27.2 times, a level that I don’t believe fairly reflects the grocer’s heightened risk profile.

Instead, I reckon the firm should be dealing on an earnings multiple of 10 times or below, terrain indicative of stocks with poor growth outlooks like Tesco.

A subsequent share price correction would leave Tesco changing hands at 78p per share, representing a whopping 55% discount from current levels around 175p.

And while Tesco may still be floating comfortably above these levels, I reckon the supermarket may find itself heading sharply lower should its market share continue to slip.

Don't despair. There are many other growth stars for savvy investors to choose from.

Indeed, I strongly recommend you check out this special Fool report that identifies what I believe is one of the best growth stocks money can buy.

Our BRAND NEW A Top Growth Share report reveals a brilliant FTSE-quoted stock that has already delivered stunning shareholder returns, and whose sales are expected to top the magic £1bn marker in the near future.

Click here to enjoy this exclusive 'wealth report.' It's 100% free and comes with no obligation.

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