Tesco Shares Finds Some Support Leading Into Thursday’s FY Report

Tesco (LON: TSCO) is set to report its full-year results on Thursday, April 10. Analysts have said in recent notes that they expect steady growth in revenue and profits, despite cost pressures and a challenging macroeconomic backdrop.

According to company-compiled consensus, Tesco is expected to post £69.97 billion in group revenue (excluding VAT, including fuel) for FY2024/25, with adjusted operating profit expected to come in at £3.08 billion and adjusted diluted earnings per share at 26.91p. 

Forecasts for the following two years suggest modest revenue and profit growth, with EPS projected to rise to 32.04p by FY2026/27.

UBS, which in late February labelled Tesco a “top pick”, said the grocer likely enjoyed a strong final quarter, driven by 4% like-for-like volume growth.

It sees Tesco guiding prudently for next year, forecasting retail earnings of around £3 billion—potentially leaving room for upgrades.

Analysts also highlighted around £450 million in cost pressures linked to the Budget, but noted that savings and efficiency gains could help mitigate the impact.

Hargreaves Lansdown’s Aarin Chiekrie said in his preview that “Tesco performed well in the run-up to Christmas, with like-for-like retail sales moving 3.1% higher.”

“Growth in the UK and Europe helped to offset declines in its wholesale business, Booker,” wrote Chiekrie. “It’s a competitive space but its improving proposition saw Tesco record its highest market share since 2016. Investors will be keen to see this trend continue when it reports full-year results next week.”

Bernstein, meanwhile, reiterated its Outperform rating on Tesco last month, citing the supermarket giant’s dominant position in the UK grocery sector. 

“Tesco is well positioned to dominate the market with 46% of the profit pool versus 28% market share,” analysts said, calling the retailer a clear beneficiary of scale advantages and cost discipline.

Tesco's shares have found some support in recent days, moving off the ~321p level. With the FTSE moving positive today after a four day decline that stretched above 10%, Tesco has gained 1.38% on the day, and more than 3% from March 19 lows.