Tesco shares – Click & Collect a bargain?

September 25, 2014

tesco click and collect

This week has been a very bad week for Tesco, in fact the last 12 months has seen Tesco fall from grace, and hit the ground with a very large thump.  The announcements on Monday, about the accounting Scandal, which I covered on Sky News, was the final nail in the coffin.

The value of Tesco shares are now below £2 – the first time in 10 years and the business value is now £15bn.  This is shocking, but I believe there is value in Tesco, and it is not just me that thinks this.  Mike Ashley has used his FTSE listed company, Sports Direct, to put a £43m gamble on the shares of Tesco .

There is no telling what will happen with Tesco but a few facts that I have considered:

  1. Tesco is the worlds 3rd biggest retailer
  2. Tesco turnover is around £64bn – yes Billion pounds!
  3. Tesco has £25bn of Tangible assets – land and buildings that can be sold or leased back
  4. Tesco’s net assets are £15bn
  5. Tesco’s cashflow is around £3bn
  6. Tesco is a world wide company
  7. Tesco has 28% of the UK grocery market, plus much more online, restaurants and non-food
  8. Tesco is growing significantly online – this is not forecast in any figures

We can see there are some major issues at the retailer, and they will take a long time to fix, but is it really only worth the value of it’s net assets?

Today’s share price, assumes the company will not grow, will not return to big profits and will not have a future.  They do have an uphill struggle, but they have such status, that I believe their shares can only go one way

I am not offering advice, I am merely stating the facts that I have used to make my decision. I am a shareholder in Tesco.