The last 12 months have been a terrific time to be a Tesco (LSE:TSCO) shareholder. The UK’s leading grocery retailer’s seen its valuation fly by almost 40% as it steals back market share from competitors. As of February, the latest data from Kantar shows Tesco now controls 28.3% of the UK’s grocery market, clawing customers from Asda and Morrisons.
But with the busy Christmas period now over, where can the Tesco share price go from here? And how much money could investors be on track to make over the next 12 months?
A tight grip on British shoppers
Despite its huge size, Tesco continues to deliver respectable growth. In fact, its latest quarter marked the 19th consecutive period of expanding its market share. The secret behind the business’s success? Its Clubcard scheme.
There are now around 23m members of Tesco’s Clubcard scheme across Britain versus the estimated 28.4m homes in the country. That’s a market penetration of roughly 81%, while Sainsbury’s is 68%, with its Nectar loyalty card scheme.
With price-matching programmes to fend off discount retailers like Aldi and Lidl and premium quality offers to attract shoppers from Waitrose and Marks & Spencer, Tesco’s having little trouble growing its sales volumes. And the firm remains on track to deliver £2.9bn of adjusted operating profit for its 2025 fiscal year, which ended in February.
Investors will have to wait a couple more weeks before the full-year results are released. But as things stand, Tesco appears to be firing on all cylinders.
Is now the time to buy?
With management’s strategy seemingly paying dividends, the general consensus looks pretty positive. In fact, of the 17 analysts monitoring the stock, 14 have issued a Buy recommendation, with an average 12-month price target of 417.50p.
Assuming this forecast is accurate, that means investing £5,000 today could grow into £5,440 by this time next year. And that’s before factoring in the extra 3.3% gain, or £150, from dividends based on today’s yield. Obviously, this isn’t a jaw-dropping amount of potential growth. But for a mature industry titan, it’s pretty respectable. And given sufficient time, further improvements to its market share and sales volumes could see the stock climb steadily higher.
Of course, none of this is set in stone. Even the largest enterprises in the world have their weak spots. And for Tesco, food inflation‘s a fairly significant threat. As prices rise, shoppers may be forced to venture elsewhere or reduce the quantity of premium-priced goods in their weekly shopping basket.
We’ve already seen the firm’s price-matching scheme helping to mitigate this impact. But with more customers switching to cheaper products, lower volumes of its premium, and higher margin products could cause revenue and earnings growth to stall.
All things considered, I remain cautiously optimistic about the future of Tesco’s share price. The current forecasts may fail to materialise, but the long-term picture looks sound, in my opinion. Having said that, this isn’t a business I’m rushing to buy right now, given there are other more attractive growth opportunities to be found elsewhere.
