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If done correctly, buying shares after the revenue release can be beneficial. Recent Investors Tesco (LSE:TSCO) Stocks can prove this. FTSE 100 Grocery retailers have enjoyed a stock price rise of nearly 20% since full-year results were reported more than three weeks ago.
So why is Tesco’s stock price rising soaring? And can supermarkets continue to offer strong returns to investors more than this year?
Investment profit
Tesco’s shares took a bet before the company’s results day on April 10th. The stock fell 17% in a month, following a further immediate decline when revenue reports were released amid fears of an intensifying price war in the UK’s grocery sector.
However, a gross investor who put £5,000 in the supermarket on the earnings day could have bought 1,589 shares. Today, the market value of the position is £5,976.23. That earns nearly £1,000 in less than a month!
Certainly, you don’t necessarily buy stocks on earnings day. Therefore, we focus on multi-year investment opportunities rather than short-term stock price movements. Still, Fortune would have been in favor of the brave here.
Revenue and competition
Certainly, despite initially negative market responses, there was much to support Tesco’s financial results. Certain highlights included a new £1.45 billion share buyback programme that was completed by April 2026, with an improvement of 10.9% in underlying operating profit to £3.1 billion.
However, the forward guidance was cautious. The underlying operating income is expected to shrink by £010 million in this fiscal year to £040 million. It is likely that the board of directors were surprised by “Asda’s claim.”A very important war chest“This will allow you to cut prices and withstand years of weak trading in the fight for market share.
In the UK’s thin margin grocery sector, fierce competition is nothing new. However, ASDA’s price cuts for nearly 10,000 products suggest that the latest developments need to be taken seriously.
Tesco claims a massive market share of 28.3% and is equipped with large economies of scale and firepower to accommodate its rivals. That said, the £9.5 billion net debt burden is a concern as it could limit the company’s flexibility.
Nonetheless, I think Tesco’s predictions are deliberately conservative and give the company plenty of room to bring pleasant surprises. With time to consume the company’s outcome and competitive situation, traders seem to agree, and therefore the recent surge in Tesco’s stock price.
It’s worth noting that Tesco was the latest second best supermarket Which of? In-store shopping customer satisfaction survey, follow-up only Marks and Spencer. In contrast, ASDA suffers at the bottom of the table. This raises questions about its ability to separate customers from the UK’s biggest grocery store, especially if standards slip further in an escalating price war.
Holding stocks
Overall, I think Tesco’s stock is well positioned to bring about further growth. I want to maintain the position I have.
The risk of competition should not be overlooked, but the 12.84 shares’ positive price (P/E) ratio suggests that today’s business is still good value, and it’s worth taking into account the stocks. Additionally, there is a dividend yield of 3.7% to increase the attractiveness of your investment.
Ultimately, careful guidance could prove to be a wise move. You wouldn’t be surprised if Tesco beats expectations.
