Tesco shares hammered

IronWolf

Glen_Clark wrote: »

I bought Sainsbury as well but according to google;
Tesco price earnings ratio is 8.76
Sainsburys price earnings ratio is 9.11
does that not make Tesco cheaper than Sainsburys?

I don't know which yield you mean. I took it to mean the dividend yield - percentage paid out in dividends, But surely the earnings are more important than the dividends?
The bust banks were still paying good dividends when they had no genuine earnings, which was only good until they went bust.

Earnings are more important than dividends when the company is re-investing those earnings well, and Tesco, (apart from the US adventure) are reinvesting earnings at a high rate of return.

Even considering they are a tight margin supermarket, they manage to get 17% return on equity. That's very impressive and that's why its a good thing that Tesco doesn't pay out a high proportion of its earnings in dividends. I would rather they reinvest our profits at 17% return, expanding their asian and European prescence, than paying it out to me in a dividend. I dont know about the rest of you but I dont feel confident enough to beat a 17% p.a. return

Glen_Clark wrote: »

Just that I think Tesco has got so big it cannot keep growing and increasing profits at the rate we have come to expect. But if it keeps them anywhere near where they are now I shall be happy to keep them and enjoy the dividend, irrespective of the share price.

In the UK, growth will be slower, but they have plenty of room to grow in Asia and eastern Europe, and Tesco bank is a high margin business which also has room to grow.

melbury

I am a Tesco shareholder, bought them many years ago for £1.61 per share. I think they will go up again, this is probably a wake up call for the powers that be.

Personally I don't shop there anymore, I prefer Waitrose and Lidl:D

Glen_Clark

IronWolf wrote: »

Tesco bank is a high margin business which also has room to grow.

Yes I think so too.
A great earner for a retail bank is billions sitting in old deposit accounts earning about 0.1%. But Tesco Bank hasn't been around log enough to gain so much from that yet.

IronWolf

It still hasn't launched its mortgages either, which should be another nice little earner.

Glen_Clark

Tom_Pickering wrote: »

Not all the top brass....

Tesco UK chief dumped shares worth £200,000 ahead of 20% sell-off

http://www.thisismoney.co.uk/money/markets/article-2086364/Tesco-shares-UK-boss-Noel-Bob-Robbins-dumped-shares-ahead-profit-warning-20-sell-off.html

Thats a fair point, but far less suspicious than what we are used to seeing - Bad news released to the press and the share price rises - presumably because those with advance knowlege have already shorted the shares and are buying them back. The crash in the share price when the news was released at least proves insider dealing was not widespread, if at all.

sabretoothtigger

Or they dont think the price has fallen enough yet which was my fear. Normally I buy on dips but Ive read its better to wait what this new CEO has to say in way of a business plan.
If others with more substantial funds were to wait before buying then the price naturally declines as weaker hands withdraw to invest elsewhere. I'll take another look in the spring possibly after I dispose of SBRY at a small profit

Is Tesco gets 17% annual returns that'd explain why WB likes them so much, he argued any price drop would prompt more buying by himself. It is a foreign stock though and their USA stores are possibly future write offs so I do wonder how enthusiastic any buying would be. Their asia stores are doing well at least.

The mortgage avenue is complex to say the least, savings is one thing but big loans is a hefty burden to take on unless they somehow revive securitisation

Glen_Clark

sabretoothtigger wrote: »

Or they dont think the price has fallen enough yet which was my fear. Normally I buy on dips but Ive read its better to wait what this new CEO has to say in way of a business plan.
If others with more substantial funds were to wait before buying then the price naturally declines as weaker hands withdraw to invest elsewhere. I'll take another look in the spring possibly after I dispose of SBRY at a small profit

Well good luck with that.
Chances to buy Tesco at 9 times earnings don't come often, and trying to call the bottom of the market without the wisdom of hindsight is a risky game.

*Kat*

Hopefully this is just a glitch, I work for T, so just do the BAYE and SAYE - ugh! lol

82much

I bought Tesco after reading Warren Buffet recommendation. On Tuesday I wanted cash to buy in something else quickly so sold Tesco at 3.90 and luckily my next purchase has risen by more than 10%. I will probably go back in to Tesco but watching it for a few days first - waiting for my PB money to be transferred!
I have been quite a loyal shopper at Tesco for quite a number of years but have noticed in the last few months that Sainsbury prices are less than Tesco on several items I purchase regularly - now I shop at both!

sabretoothtigger

Well good luck with that.
Chances to buy Tesco at 9 times earnings don't come often

9 PE is not massively cheap not in this market. Major profitable companies sell for 5 PE and nobody is rushing to get them either apparently. Tesco is still greatly popular and they could fall more unless major money says different

Buying now mostly says you believe earnings will rise in future, they will turn it around thereby making the historic PE even more out of line with current profits.
I already hold them, Im ok to hold them as Im sure this is quite possible, to add more I need a better reason plus I dont like the chart especially

Tesco shows as five times the size of Sainsbury, I take it alot of shares are off the market