Tesco shares hammered

Glen_Clark

sabretoothtigger wrote: »

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....

Well that would be nice, but if it stays anywhere near the current price earnings ratio I would still be happy because thats far better than its earning in the bank.
With the Government addicted to money printing I am mindful of what happened in Weimar Germany. Those who lost everything were in cash, those who kept their wealth in shares did better because they still owned something of value.

Who are the major profitable companies with a PE of 5?

dillydilly

Read through this thread and am amazed no one has mentioned what to me is the obvious - sales are down slightly on last year because of the end of double clubcard points. Last December you got double points and then you increased the value four times on deals. That's effectively an 8% discount - this will have boosted loyalty and hence sales. That was never going to be permanent and was possibly related to Terry's retirement plans. This decline is hence a one off event with the underlying performance sustained. Remember the economic outlook is poor, when shoppers switch their spending to cheaper channels. Tesco's buying power puts it is the best position to benefit from that dynamic. Buy.

oldvicar

dillydilly wrote: »

....... Remember the economic outlook is poor, when shoppers switch their spending to cheaper channels. Tesco's buying power puts it is the best position to benefit from that dynamic. Buy.

On the contrary, people have had enough of wasting their money on poor quality products and are being careful to make sure they get value for money by carefully choosing reasonable quality items. Hence booming sales/profits at the likes of John Lewis and Waitrose.

Tesco keep pushing the 'we are cheap' message, which is not the right message, especially when it is so obviously not true. Tesco stores now remind me of a jumbo version of Kwik-Save at the start of their painful decline.

sabretoothtigger

I dont remember qwik save ever pretending to be upmarket :laugh:

All Tesco has to do is thread all its various arms together to create a virtuous circle. They have created great brand name strength just from one set of advertisments and other overheads are greatly reduced. They dont have to be any better then that

Tesco might actually read this thread. I think ever since frenzied bargain hunters got out of control with multiple rogue codes they have assigned a division of tesco secret service elite stormtroopers to constantly scan for scams on these forums

Who are the major profitable companies with a PE of 5?

I had a quick look when I said that and they might have evaporated with this latest rally but VED KAZ BHP FXPO and XTA are still too cheap I reckon
APF AV PMO show as 5.
I dont normally decide by PE because its retrospective but Im sure theres plenty more value besides tesco

Cable and wireless show as 2 PE now but I think they do have fairly serious problems, I sold them at twice the price they are now
Resolution has yield of 7 with cover of 4.5 times but its a quite complicated company, no idea

BP is an obvious possible to buy especially nearer 400, Im far more certain of that then tesco and I have both

oldvicar

I dont remember Tesco pretending to be upmarket :laugh:

FOX_HOUND

oldvicar wrote: »

I dont remember Tesco pretending to be upmarket :laugh:

Doesn't matter what they pretend to be.

If they keep indulging in workfare they are going to be picketed.

One for the capitalists straight from the horses mouth!

Think about that Mr Tesco

Ten98

dillydilly wrote: »

Read through this thread and am amazed no one has mentioned what to me is the obvious - sales are down slightly on last year because of the end of double clubcard points. Last December you got double points and then you increased the value four times on deals. That's effectively an 8% discount - this will have boosted loyalty and hence sales. That was never going to be permanent and was possibly related to Terry's retirement plans. This decline is hence a one off event with the underlying performance sustained. Remember the economic outlook is poor, when shoppers switch their spending to cheaper channels. Tesco's buying power puts it is the best position to benefit from that dynamic. Buy.

Absolutely spot on. Sure, sales were marginally better last Christmas but then the additional overheads of double Clubcard and a monster marketing campaign would have eaten into those sales quite significantly.

However I think most if not all of the savings from turning off double points were pumped into "The Big Price Drop", which is what is driving the underlying drop in Like For Like. Surprisingly, if you drop prices on practically all of your products across the board, even though you increase the number of customers and number of sales, you take less through the tills.

What remains to be seen is if profit margins were maintained. The truth will out in the full-year statement, and I do expect to be pleasantly surprised. But then I don't expect BBC News to run a story on the very top of it's website saying "Tesco turn in good profits this year despite slight dip in sales over Xmas!" in the same way as they did for "XMAS SALES SLUMP!!" so the effect on share price will be more of a slow burn than a huge spike.

sabretoothtigger

The xmas sales story is an annual back to work type story, to some shops xmas can be 60% or more of the sales. Obviously this isnt true of a supermarket so its not quite the carnage it might be for some

I dont remember Tesco pretending to be upmarket

Yea I think they nicked a few from M&S at some point. Maybe they lost them again but Ive worked in the supply chain for both and theres been crossover in the past between the two. Sainsbury were traditionally the snootiest market of the regulars apparently, I think they all diversified with varying success, Tesco is the most spread out

Today the shares are flat to underperforming, slow drift down fits. Volume bit calmer but still high

Diary of a Dumb Investor: why I’m not buying Tesco
I really, really wanted to pile in to the battered stock after last week's profit warning.
http://emails.citywire.co.uk/a/hBPFBl3B8eu8jB8fe-tNsfvhwYY/nws11?EMAIL_ID=249194

srcandas

Well interesting and I fancy a crack at this. But I don't normally deal in shares and am unlikely to be interested in anything other than Tescos. So if I want to put £3000 where should I go to buy?

I've looked at HL and they have a deal in Jan to buy for a pound. Is this a good bet? Or are there specialist places for people only interested in one transaction?

My thoughts are:
Unlikely tescos falling below £2 and I'll get a few divis. I can afford to lose that.
Most here seem optimistic at £3.12 and the buffet recomendation at a much higher price makes me think it is a good bet.
Certainly IMHO seems a better bet than RBS or LloydsTSB.
And at best elsewhere I can get 2% if I'm lucky (used my ISA already and have April's ready)
Tx for any help :beer:

gadgetmind

srcandas wrote: »

I've looked at HL and they have a deal in Jan to buy for a pound. Is this a good bet? Or are there specialist places for people only interested in one transaction?

That £1 deal is a loss leading for HL and I doubt you'll beat it anywhere else. I use HL for (low frequency!) share dealing and it all works very well.