Tesco

Tesco PLC (Tesco) is a British food retailer. It runs supermarkets, convenience stores, online grocery and rapid delivery in the United Kingdom, the Republic of Ireland (ROI) and Central Europe, and it owns Booker, a food wholesaler. It also sells clothing and home goods as F&F, and it earns income from Clubcard, Tesco Media (advertising), Whoosh rapid delivery, Insurance & Money Services and Tesco Mobile. Tesco reports in pounds.

On a 52-week basis, sales were £66,588 million and Group adjusted operating profit was £3,152 million in FY 25/26. In the 26 weeks to August 29, 2026, sales were £33,776 million and adjusted operating profit was £1,783 million. The shares in this pick are American depositary receipts (ADRs): TSCDY is a sponsored Level 1 program that trades over the counter in US dollars, and J.P. Morgan is the depositary.

One ADR equals three ordinary shares (a ratio of 1:3, from Tesco's ADR page). Tesco is not an SEC filer, so its own English reports are the source. Ken Murphy is Chief Executive.

Tesco trades above the AI estimate because investors pay for a steady grocer that grows profit and returns cash, even though its market is slow. Its profit depends on holding UK market share against discounters, on prices that stay low enough to keep customers, and on savings and new income streams that pay for that investment. Tesco also reports in pounds while the ADR trades in dollars, so the exchange rate moves the ADR price.

For the price to hold, three things must be true. UK like-for-like sales must stay positive and market share must hold near its present level: Worldpanel share was 27.8% in the half, down 24 basis points from an exceptionally strong year before. Save to Invest must deliver its £500 million savings for FY 26/27, so that profit grows while Tesco keeps lowering prices, for example with Aldi Price Match.

And free cash flow must stay between £1.5 billion and £2.0 billion, so that the £950 million buyback and a progressive dividend are paid without more debt. Net debt to EBITDA was 2.0 times, below the target range of 2.3 to 2.8 times. The Q3 and Christmas trading statement on January 14, 2027 and the FY 26/27 results in April 2027 are the next tests.

AI estimate, checked by Kevin. How it is made

1. Oct 8, 2026Passed

   Interim results FY 26/27: profit and outlookGrowth in adjusted operating profit at constant rates with the FY 26/27 outlook kept or raised passes; a cut to the outlook fails.Outcome: Adjusted operating profit rose 6.3% at constant rates to £1,783 million, and Tesco raised the low end of its outlook to £3.15 billion.
2. Jan 14, 2027Pending

   Q3 and Christmas trading statement: UK salesUK like-for-like sales growth of 1% or more with the outlook kept passes; negative UK like-for-like sales or a cut to the outlook fails.
3. Apr 2027 · est.Pending

   FY 26/27 results: profit, cash and buybackAdjusted operating profit in the guided range, free cash flow of £1.5 billion or more and the £950 million buyback done by April 2027 pass; a miss on these fails.

Every passed and failed checkpoint across all picks

• October 8, 2026Tesco reported interim results for FY 26/27 (26 weeks to August 29, 2026). Group sales were £33,776 million, up 1.6% at constant rates, and like-for-like sales rose 1.0%: UK up 1.5%, ROI up 4.1%, Central Europe up 0.4% and Booker down 2.6%. Adjusted operating profit rose 6.3% at constant rates to £1,783 million, and adjusted diluted EPS rose 12.2% to 17.3p. Free cash flow was £1,570 million, which includes about £250 million of payroll timing that reverses in the second half.
• October 8, 2026Tesco raised its FY 26/27 outlook for Group adjusted operating profit to £3.15 billion to £3.30 billion, from £3.0 billion to £3.3 billion. It kept free cash flow guidance at £1.5 billion to £2.0 billion, raised capital expenditure guidance to about £1.7 billion from £1.6 billion, and raised the FY 26/27 share buyback to £950 million from £750 million. The buyback ends by April 2027.
• October 8, 2026The Board set an interim dividend of 5.05p per share, up 5.2% from 4.80p. Tesco pays it on November 20, 2026 to holders on the register on October 16, 2026.

• UK grocery competition is strong. Worldpanel UK market share was 27.8% in the half, down 24 basis points from a year with record weather and rival disruption. Tesco spends on price, with Aldi Price Match on about 700 products, and discounters can still take share.
• Booker, the wholesale business, had like-for-like sales down 2.6% in the half, and its adjusted operating profit was flat at £163 million. More falls in wholesale sales would hold back Group profit.
• Costs rise. Tesco said that investment in the customer offer and operating cost inflation offset part of the gain from a better sales mix. The £500 million Save to Invest savings must cover these costs for profit to grow.
• Tesco earns pounds, and the ADR trades in dollars. A weaker pound lowers the ADR price in dollars even when profit is steady. The ADR also trades over the counter, with less trading than the shares have in London.
• Tesco said that consumer confidence was resilient in the first half, but ongoing geopolitical tension keeps uncertainty high for households. Leases of £7,852 million also commit Tesco to fixed payments, and fixed charge cover was 4.2 times.

Tesco reported net debt of £10,037 million at August 29, 2026, down from £10,563 million at February 2026. Of this, £7,852 million is lease liabilities and £2,185 million is net debt before leases. Read more

Yield at the current rate

2.5% (current annual rate, at today’s price)

Dividend yield

2.5% (last 12 months, at today’s price of $22.05)

Paid per share

$0.543 in the last 12 months (2 payments)

Current annual rate

$0.543 (the last two payments)

Latest ex-dividend date

October 19, 2026, $0.20 per share

Dividends per share by year

From 2020 to 2025, the dividend grew by about 3.6% a year.

Source: company filings and market data, read on November 13, 2026. The ex-dividend date is the first day a buyer no longer gets the next payment.