Tesco’s first quarter commercial statement is established to maintain a limit on shares
The traders certainly seem to think so. The volume in the Tesco options has increased in the last week. Billing on June 5th was only more than six times the 20-day average, according to Bloomberg data. The jump in the contracts purchased was entirely input. These give their owners the right, although not the obligation, to sell at a specific price. Pone tends to be bearish, as they benefit when an action falls.
The operations followed the data of the Kantar and Nielsen research teams that show weak retail spending in recent months, possibly linked to the uncertainty of the Brexit. As Tesco’s shares had outperformed their rivals up to that point, they suffered most of the disappointment in the market.
The investors were already prepared for new disappointments. As one of the largest retailers in Europe, Tesco’s exposure to the chronic pressures of the structural and competitive sector is magnified. And with CEO Dave Lewis’ long-term margin goal fulfilled, those pressures are more likely to generate revenue, rather than Tesco’s next priority for earnings growth. Recent data from Kantar / Nielsen were just the negative icing on the cake.
The stock, which was still up almost 20% in the year to close on Wednesday, could see a more reflective sell in reaction to quarterly sales, especially given the comparable hard quarter in 2018. Even so, Tesco could show better growth than your rivals
The consensus points to an increase of 0.8% in comparable sales.
Investors will also focus on:
Sales in Asian stores that have dragged the group’s performance for several quarters
If the closure of 62 stores in Central and Eastern Europe with losses in H2 has begun to slow down the margin decreases there
Net debt: increased slightly after the acquisition of Booker, but fell slightly to £ 12.2 billion, including pensions, until the end of 2018/19
Cost reduction target: 1,500 million pounds sterling by the end of 2019/20, including 9,000 job cuts. The costs associated with the count reduction represent a moderate upward risk to the target
Thoughts of the graph
Leaving volatility aside, stocks have retained much of the good progress made since the beginning of 2016, multi-year minimums.
Only the most optimistic buyers will be dissatisfied with the uptrend line in the dark lows that has been intact for almost exactly three years.
The shorter-term perspective for the action seems more burdensome. It trades below its 21-day exponential moving average (21-DEMA) and approaches its 200-day moving average (200-DMA). The bias is clearly negative.
The 200-DMA will be a fundamental test of how pessimistic feeling is
In the case of negative fundamental surprises, any breach of 224p support would seal the deal for deeper losses
The disadvantage would then focus on the low swing support of 189p
TSCO should exceed the maximum of 253.5p in April to invalidate the downward trend since then