Tesco still attracting buying interest

Tesco's recovery continues apace, with a quarter of growth which builds on the lofty standards set in the full-year numbers in April.

Overall first-quarter sales improved on the previous year, with the core UK and Ireland performance coming in even stronger. Meanwhile, the wisdom of the Booker acquisition, whose own growth was particularly strong in the quarter, is already becoming apparent, whilst the decision to focus more sharply on its more profitable lines with the removal of Tesco Direct is sound. 

It is easy to forget the dominance Tesco enjoys in market share, such that the improved sales performance is even more impressive. Even the recent switch, whereby wage growth is now outpacing inflation, could boost Tesco's prospects in terms of stronger consumer confidence.

Source: interactive investor      Past performance is not a guide to future performance

There are some niggling doubts to remove, however. The performance in the Asian business was laboured, the Booker integration needs to be carefully managed and, inevitably, Brexit implications will need to be addressed when they become clear. 

At the same time, Tesco will need to keep a firm hand on the tiller in this most competitive of sectors, which may enable it to improve on its currently paltry projected dividend yield of 2%.

Even so, there are strengthening signs that Tesco is returning to some of its former glories. This has been reflected in a share price which has risen 34% over the last year, as compared to a 3.9% hike in the wider FTSE 100, and a jump of 17% in the last three months alone. 

Market appetite has also returned strongly, with the general consensus of the shares as a 'strong buy' unlikely to be disturbed by this latest update.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.