Tesco PLC Just Beat EPS By 9.1%: Here's What Analysts Think Will Happen Next
Investors in Tesco PLC (LON:TSCO) had a good week, as its shares rose 7.4% to close at UK£5.04 following the release of its half-year results. The result was positive overall - although revenues of UK£37b were in line with what the analysts predicted, Tesco surprised by delivering a statutory profit of UK£0.17 per share, modestly greater than expected. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Taking into account the latest results, Tesco's 14 analysts currently expect revenues in 2027 to be UK£75.0b, approximately in line with the last 12 months. Statutory earnings per share are predicted to accumulate 3.5% to UK£0.31. Yet prior to the latest earnings, the analysts had been anticipated revenues of UK£74.8b and earnings per share (EPS) of UK£0.31 in 2027. So the consensus seems to have become somewhat more optimistic on Tesco's earnings potential following these results.
Check out our latest analysis for Tesco
There's been no major changes to the consensus price target of UK£5.27, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. Currently, the most bullish analyst values Tesco at UK£5.80 per share, while the most bearish prices it at UK£4.80. Still, with such a tight range of estimates, it suggeststhe analysts have a pretty good idea of what they think the company is worth.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 0.1% by the end of 2027. This indicates a significant reduction from annual growth of 4.3% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Tesco is expected to lag the wider industry.
The Bottom Line
The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Tesco's earnings potential next year. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Tesco's revenue is expected to perform worse than the wider industry. The consensus price target held steady at UK£5.27, with the latest estimates not enough to have an impact on their price targets.
With that said, the long-term trajectory of the company's earnings is a lot more important than next year. At Simply Wall St, we have a full range of analyst estimates for Tesco going out to 2029, and you can see them free on our platform here..
You should always think about risks though. Case in point, we've spotted 1 warning sign for Tesco you should be aware of.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.