Tesco share price has been in a strong bull run in the past few years as it continued to gain market share in the UK retail sector. TSCO stock jumped for two consecutive weeks, reaching a record high of 425p. It has soared by over 230% from its lowest point during the pandemic, bringing its market capitalization to over £37 billion.
Why the Tesco share price has surged
Tesco, the biggest retailer in the UK, has been in a strong bull run that has added billions of dollars in value. This surge has mirrored the performance of other British retailers like Sainsbury’s and Marks & Spencer, which are hovering near their all-time high.
Tesco stock price jumped as it continued to gain market share in the retail sector, and its profits have thrived. Its annual revenue stood at over £64 billion in 2020 and nearly £70 billion.
The company has also worked to improve its profitability by cutting costs and exiting its banking operations. It sold Tesco Bank to Barclays, leaving behind a leaner organization.
At the same time, the company has rewarded its shareholders substantially in the past few years. It has been reducing its shares in the past few years through its dividends. The total outstanding shares have plunged to 6.7 billion, down from the pandemic high of 7.67 billion.
It has also increased its dividend payouts to investors, which has resulted in a dividend yield of 3.13%.
Revenue and market share growth
Tesco share price has jumped because of the ongoing market share gains. The most recent results showed that the company’s market share rose by 44 basis points to 28%. It was the 24th consecutive week of market share gains.
Tesco has benefited from its robust network in the country and the fact that it has a strong price positioning. This gives it an added advantage compared to Aldi, one of the biggest discount retailers in the country.
Food sales have jumped, while the company’s innovation saw it launch 350 products in the first quarter.
The results showed that its sales rose by 5.5% in the first quarter to £15.3 billion, with the UK segment making £12.3 billion. The ROI segment made £772 million, while the Booker and Central Europe businesses made £2.3 billion and £997 million, respectively.
Furthermore, there are indications that the Tesco share price remains a bargain despite its strong growth. It trades with a price-to-earnings ratio of 18, much lower than Walmart’s 40 and Kroger’s 19.
Tesco stock price technical analysis
The weekly chart shows that the Tesco stock price has been in a strong bull run in the past few years. It moved from a low of 127p in 2020 to 425p today, as we predicted here.
The stock recently crossed the important resistance level at 387p, its highest level in February. It invalidated the risky double-top pattern, a highly bearish pattern.
It has remained above the 50-week and 100-week moving averages, a sign that bulls are in control. Therefore, the stock will likely continue rising as bulls target the psychological point at 500p later this year. The alternative scenario is where it retreats and retests the key support at 387p.
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