Tesco shares in focus before June 18 trading update

Tesco will publish its first-quarter trading statement on June 18. Shares were trading around 462p as investors awaited the update and a bullish chart pattern formed on the price chart.

Investors will scrutinise the statement for changes in revenue growth, profit margins and market share as UK households continue to face cost-of-living pressures. The Office for National Statistics reported that retail sales stagnated in April after growth of 1.4% in March, 1.6% in February and 4.6% in January.

In its most recent full-year results Tesco reported revenue of £66.58 billion, up 4.6% year on year. Free cash flow rose 11.8% to £1.957 billion and operating profit increased 0.8% to £3.15 billion. The company’s market share expanded to 28.3%, its highest level in more than a decade.

Shareholder returns in the last year included £937 million in dividends and a completed £1.45 billion share buyback. Since 2021 Tesco has repurchased more than £4.3 billion of stock, reducing the share count from 6.7 billion to 6.35 billion.

Valuation metrics include a forward price-to-earnings ratio near 16.5x, a PEG ratio around 1.8, EV/EBITDA about 8.6x and a price-to-book ratio roughly 2.75x. Analysts’ average target is about 516p and ten of fifteen analysts covering the stock have a buy rating.

On the technical chart the stock has traded in a descending channel since February and currently sits just below the channel’s upper trend line. Some chart readers identify the pattern as a bullish flag. The share price remains above its 200-day moving average. The stock was trading slightly below this week’s high of 476p; the year-to-date high stands near 507p.

The June 18 trading statement will provide a snapshot of spring sales and include commentary on margins, promotional activity, costs, supply chain pressures and inflation in everyday goods. Investors and analysts will use that information to update forecasts and ratings.