The Outlook For Tesco

Purely in terms of price of goods, I cannot see why Sainsbury are doing better than Tesco right now. In my area Sainsbury is always, outside of promotional offers, generally more expensive than Tesco and ASDA, Always. When it comes to value range products, which are easier to measure price wise because essentially the product size is essentially the same for all, Tesco and ASDA are always significantly cheaper than Sainsbury. How Sainsbury justify charging their customers an extra 1-10% for exactly the same value product and get away with it is beyond me.

For the stock market, Sainsbury have been on a roll recently, P/E now over 12, sentiment is with it, share price going up. Tesco, P/E back under 9, back to being unloved again after the recent largely expected results, share price going down. Tesco has more to worry about because of its wider international exposure. Sainsbury is UK based, so any fall in its UK numbers could hit the share price hard. I wouldn't say that Sainsbury is cheap right now given its recent share price upward trend.

A couple of years ago, everyone had written off Glaxo. From the depths of investor despair after losing a major court case at the end of 2010, GSK went on to be a star performer in 2011 and have remained at that elevated level through 2012 as investors appreciate reliable revenues and dividends.

Now a large number of people have witten off Tesco. But Tesco sell low-cost essentials of life to millions of people on a weekly basis. Like baccy, booze or pharmaceuticals: the customers are very reluctant or simply unable to avoid the purchase of these items.

Although Tesco's international exposure is a nuisance at the moment, it may become a blessing if the UK remains stuck in recession while other nations pick up again in a few years time.
Does anyone seriously think that the UK will be the first and fastest to start recovering?

Currency moves also hurt Tesco profits; the Pound has been bid-up to quite high levels and may see a return to a more realistic exchange rate which reflects the UK's poor economic fundamentals. Such a drop in the Pound would cause Tesco's overseas profits in stronger currencies to translate in more £ profit.

For what it's worth, my local Tesco store seems to be getting much busier in the last few months. I - and especially the wife - would prefer to shop more upmarket but no others are within reasonable distance.
I usually prefer to go to Tesco when it's quiet - but nowadays there never seems to be a quiet time; not particularly for lack of checkouts being open; the store just seems to be bustling with people stuffing their trolleys.

Don't write Tesco off.
The shares are cheap and the company has a generally good financial and economic position.

Hi jackdaww

I suspect the biggest risk in Tesco is an investor succumbing to mass hysteria and bailing out at these silly low prices.
The last few days' price implosion looks like a "capitulation" - which clears out all the weak players.
I've no intention of letting Mr.Market rob me of my Tesco shares at these prices.

Tesco's international problems have been magnified by new laws in Korea regarding closing times which the company had no control over. Until recently their international performance was pretty good. The US continues to be a cash drain, but is slowly improving. If losses continue however, don't be surprised if they get out. I suspect that if Tesco announced they were selling off their US operations, even at a loss, the share price would probably go up 10-20% on that decision alone. For now, Tesco have decided to stick with it and the market remains skeptical.

As for the UK, the revamp will clearly cost them in the short term. A lot of this has been expected so the current share price fall looks very much like a shake out, but market sentiment is pretty much anti-Tesco right now as can be seen by numerous market downgrades coming in from brokers, while rival Sainsbury seems to be the belle of the food retail market ball at the moment.

I doubt Tesco's share price will improve much anytime soon, but if the new strategy works then it's cheap.

I bought in at 309 on friday, i got the feeling they were being deliberately driven down prior to going ex div this coming wednesday? (a tree shake?). when i realised there was a 4.63p interim coming in a few days time i was straight in!.