TESCO PLC

 

TESCO UK

 

Fiscal year is March-February. 

All values GBP Millions.

2022 2021 2020 2019 2018 5-year trend 

INCOME STATEMENT

Sales/Revenue 61,344 57,887 58,091 63,911 57,493

 Sales Growth 5.97% -0.35% -9.11% 11.16% - 

Cost of Goods Sold (COGS) incl. D&A 56,650 54,028 53,680 59,403 54,092

 COGS Growth 4.85% 0.65% -9.63% 9.82% -

 Gross Income 4,694 3,859 4,411 4,508 3,401

 Gross Income Growth 21.64% -12.51% -2.15% 32.55% -

 Gross Profit Margin 7.65% - - - -

 SG&A Expense 1,984 1,767 1,736 1,979 1,765

 SGA Growth 12.28% 1.79% -12.28% 12.12% - 

EBIT 2,710 - - - - Interest Expense 652 695 722 847 400

 Interest Expense Growth -6.19% -3.74% -14.76% 111.75% -

 Pretax Income 2,018 610 1,036 1,585 1,306

 Pretax Income Growth 230.82% -41.12% -34.64% 21.36% -

 Pretax Margin 3.29% - - - - 

Net Income 1,521 528 736 1,272 992

 Net Income Growth 188.07% -28.26% -42.14% 28.23% -

 Net Margin 2.48% - - - - 

CASH FLOW STATEMENT

 Net Income before Extraordinaries 2,560 1,547 (150) 2,649 1,839

 Net Income Growth 65.48% 1131.33% -105.66% 44.05% -

 Funds from Operations 3,430 394 3,651 3,262 2,268 

Net Operating Cash Flow 3,792 640 108 2,614 2,858

 Net Operating Cash Flow Growth 492.50% 492.59% -95.87% -8.54% -

 Net Operating Cash Flow / Sales 6.18% 1.11% 0.19% 4.09% 4.97%

 Capital Expenditures (1,178) (1,377) (1,204) (1,292) (1,637) 

Capital Expenditures Growth 14.45% -14.37% 6.81% 21.08% -

 Capital Expenditures / Sales -1.92% -2.38% -2.07% -2.02% -2.85% 

Free Cash Flow 2,843 (531) (895) 1,513 1,418

 Free Cash Flow Growth 635.40% 40.67% -159.15% 6.70% -

 Free Cash Flow Yield 9.52% - - - -

 Cash Dividends Paid - Total (731) (5,858) (656) (357) (82) 

BALANCE SHEET

 Cash & Short Term Investments 4,647 3,699 5,415 3,373 5,156

 Cash & Short Term Investments Growth 25.63% -31.69% 60.54% -34.58% -

 Cash & ST Investments / Total Assets 9.42% 8.13% 10.19% 5.93% 11.49%

 ST Debt & Current Portion LT Debt 1,272 1,655 2,817 2,209 1,479 

Long-Term Debt 14,085 14,015 14,973 15,439 7,142 

 Total Accounts Receivable 4,705 4,397 5,697 6,438 6,153 

Accounts Receivable Growth 7.00% -22.82% -11.51% 4.63% -

 Accounts Receivable Turnover 13.04 13.17 10.20 9.93 9.34

 Inventories 2,339 2,069 2,433 2,617 2,264 

Accounts Payable 9,181 8,399 8,922 9,131 8,994 

Accounts Payable Growth 9.31% -5.86% -2.29% 1.52% -

 Total Current Assets 12,189 10,807 13,608 12,480 13,600

 Total Current Liabilities 16,125 15,721 18,656 20,973 19,233

 Current Ratio 0.76 0.69 0.73 0.60 0.71

 Quick Ratio 0.61 0.56 0.60 0.47 0.59

 Cash Ratio 0.29 0.24 0.29 0.16 0.27

 Net Property, Plant & Equipment 22,780 22,896 26,108 26,899 18,521 

 Total Assets 49,351 45,512 53,147 56,898 44,884

 Assets - Total - Growth 8.44% -14.37% -6.59% 26.77% -

 Asset Turnover 1.29 - - - -

 Return On Average Assets 3.20% - - - -

 Total Liabilities 33,707 33,453 39,778 43,466 34,404

 Total Liabilities / Total Assets 68.30% 73.50% 74.85% 76.39% 76.65%

 Common Equity (Total) 15,660 12,077 13,391 13,456 10,502 

 Retained Earnings 10,022 6,329 7,168 7,121 4,290 Treasury Stock (365) (188) (250) (179) (16) Common Equity / Total Assets 31.73% 26.54% 25.20% 23.65% 23.40%

 Total Shareholders' Equity 15,660 12,077 13,391 13,456 10,502

 Total Shareholders' Equity / Total Assets 31.73% 26.54% 25.20% 23.65% 23.40%

 Accumulated Minority Interest (16) (18) (22) (24) (22)

 Total Equity 15,644 12,059 13,369 13,432 10,480

 Liabilities & Shareholders' Equity 49,351 45,512 53,147 56,898 44,884

Average Growth Rates 

Tesco PLC 

Past Five Years Ending 02/28/2022 (Fiscal Year) 

Revenue +1.34%

 Net Income +10.73%

 Earnings Per Share +0.51% 

Capital Spending -5.61%

 Gross Margin +9.55%

 Cash Flow +20.10% 

 KEY STOCK DATA 

P/E Ratio (TTM) 18.00(12/16/22) 

EPS (TTM) £0.12 

Market Cap £16.28 B 

Shares Outstanding 7.37 B 

Public Float 7.16 B 

Yield 5.20%(12/16/22) 

Latest Dividend p3.84999998(11/25/22) 

Ex-Dividend Date 10/13/22

Tesco Grows Its Market Share For the First Time in 5 Years

The supermarket giant’s turnaround plan appears to be working.

Tesco grew market share for the first time in five years over the last three months, the clearest sign to date that Britain’s biggest supermarket chain is recovering from years of turmoil to accelerate away from rivals.

"Tesco has attracted a further 228,000 shoppers through its doors to help the grocer grow to a 28.2% share of the market – its first year-on-year market share gain since 2011,” said Fraser McKevitt, head of retail and consumer insight at Kantar Worldpanel.

“Sales growth has been strongest among family shoppers, while improved trading from its larger supermarket and Extra stores has supported this month’s gains.”

Tesco shares traded up 2% to 205 pence, outperforming Britain’s bluechip index which was trading 0.8% higher.

http://fortune.com/2016/10/18/tesco-sainsburys-market-share/

CEO of Tesco - Customers are buying more things, more often, at Tesco

26 June 2015

First Quarter Trading Statement

Tesco PLC’s First Quarter Trading Statement 2015/16 was announced today at7.00am. To view the full announcement, please go to: www.tescoplc.com/1Q2015.

Highlights

- UK like-for-like sales performance improved to (1.3)% despite significant deflation and the impact of reduced couponing

- UK like-for-like volumes up 1.4%; transactions up 1.3%; 180,000 more customers shopping with us*

- Like-for-like sales growth in Central Europe and Turkey; Central European restructure largely complete

- Some improvement in performance in Asia, in challenging market conditions

- Short-term volatility remains; transformation programme progressing


Dave Lewis – Chief Executive

“We set out to serve our customers a little better every day and the improvements we are making are starting to have an effect.  We are fixing the fundamentals of shopping to win back customers and relying less on short-term couponing.  Customers are experiencing better service, better availability and lower, more stable prices and are buying more things, more often, at Tesco.

These improvements have come during the restructuring of our office and store management teams, which testifies to the focus, skill and commitment of colleagues across the business.  We have also seen an improved performance in our international markets, as we continue to focus on serving customers better.

Whilst the market is still challenging and volatility is likely to remain a feature of short-term performance, these first quarter results represent another step in the right direction.”

To view the full announcement, please go to: www.tescoplc.com/1Q2015.

Contacts

Investor Relations:
Chris Griffith: 01992 644 800

Press:
Tom Hoskin: 01992 644 645
Brunswick: 0207 404 5959

We are a team of over 500,000 people in 12 markets dedicated to providing the most compelling offer to our customers.

Tesco - profit downgrade and 75 percent cut to it's interim dividend

By James Davey, Neil Maidment and Kate Holton

It was an oversight that led to a 4 billion pound drop in Tesco's market value and the suspension of four senior executives. The newly installed CEO called in forensic accountants and lawyers to find out what went wrong.LONDON (Reuters) - "Things are always unnoticed, until they're noticed," Tesco Chairman Richard Broadbent said when asked how Britain's biggest retailer had failed to spot a 250 million pound ($410 million) sized hole in its first-half profits.

Whether conspiracy or cock-up, the scandal raises doubts over the management and financial oversight at Britain's largest private sector employer, now in the midst of the gravest crisis in its 95-year history.

"That whole finance organization must be in a world of hurt given what has gone on. The rigor and analysis and the focus seems to have fallen away a little bit," one former UK Tesco director told Reuters on condition of anonymity due to the sensitivity of the subject.

Tesco had once appeared unstoppable, boasting two decades of uninterrupted earnings growth as it bulldozed its way to dominance. Things began to go wrong in 2011.

It has now issued three profit warnings in two months with the latest causing the most alarm - the overstatement of its half-year profit forecast by 250 million pounds due to the early recognition of payments by suppliers and the pushing back of costs.

Investors, analysts and some former employees are questioning whether an aggressive culture influenced the way the company handled its finances - especially when trading slowed - and perhaps prevented staff from coming forward to warn that the numbers no longer stacked up.

Tesco has declined to comment on what may have happened until a review has been completed but chairman Broadbent has described it as "something completely out of the ordinary".

The revelation has also sparked scrutiny of the upper echelons of the company. The senior executives who ran Tesco during its glory years of the 1990s and 2000s have all left and the board lacks retail experience.

"The chairman has been the leader of this organization that seems to have failed at every turn," said David Herro of large Tescon investor Harris Associates.

Four former senior Tesco executives have told Reuters that during the 2011-2014 CEO tenure of Phil Clarke, he repeatedly clashed with directors, who found him reluctant to take advice. During that time four of the company's most senior executives quit, taking a combined 109 years of experience with them.

Clarke has declined to comment on his management style but defenders of his record point out that he was battling the most difficult market conditions in decades.

The company's head of digital told a conference this week Tesco was too big and complex to be run by "one general".

WHO'S IN CHARGE?

People outside the company have many questions - not least who has been signing off on profit forecasts in the last three months which turned out, quickly, to be wrong.

By the time the group issued the second of its recent profit warnings on August. 29, Clarke, a 40-year Tesco veteran, was technically still CEO but was working his notice while Laurie McIlwee, the firm's chief financial officer since 2009, had quit on April 4. McIlwee declined to comment for this article.

"It seems unbelievable that a retailing colossus like Tesco should not have a full-time finance director," said Adrian Bailey, head of parliament's business committee.

Tesco's finance function had been further weakened in June when Mike Iddon quit as Tesco's group finance director, planning, treasury and tax.

Tesco says that after McIlwee's resignation on April 4 it set up a group of senior finance personnel, reporting directly to Clarke. However the company has declined to say who was in that group and Clarke was himself working down his notice.

"What was the board's scrutiny of the (second) profit warning (on Aug. 29) and numbers that they put out, because you would expect it to be extreme?" asked one retail audit committee chairman, in reference to the profit downgrade and 75 percent cut to Tesco's interim dividend.

"If you're a non-executive director and you're being asked to put out those kind of profound numbers and you've got no finance director and you've got no CEO to stand beside them, how do you know they're right?"

OVERLY AMBITIOUS

Tesco said the 250 million pound overstatement principally related to its supplier contracts within the food business of its UK division - its home market which generated 48.2 billion pounds of revenue in 2013-14.

People familiar with how Tesco operates said it had been overly ambitious when predicting sales. As they then slowed, the cash rebates paid out by suppliers as incentives also dropped.

Tesco has declined to comment but said it is investigating the accounts. New CEO Dave Lewis has told staff the firm's culture needs to change.

The former UK Tesco director believes the accounting mistake could have come about due to the combination of a loss of experience in the finance department and the fact that the business is now shrinking.

"You had a business that used to be growing and had algorithms that worked," the former director said. "When the business is flat to declining and you don't really know how much you're declining by, you can get that wrong very quickly."

During two decades of uninterrupted growth Tesco had rarely made a mistake with its numbers - it issued its first profit warning in living memory in 2012 as the competition ramped up.

However, analysts and shareholders have more recently raised concerns that Clarke and his colleagues had instilled a more aggressive approach as pressure to revive the business increased.

Bernstein analyst Bruno Monteyne, who was previously a supply chain director of Tesco Asia, said managers - possibly under pressure to improve earnings - might have brought forward promotions and the right to book supplier rebates.

Tesco declined to comment.

Cantor analyst Mike Dennis, who last year questioned how the company could be maintaining its trading margin at a time of falling sales and rising costs, noted that staff had been incentivized via share schemes to maintain the measure.

PwC [PWC.UL] Tesco's auditors since 1983, had highlighted the rebate issue in its 2013-14 report as an "area of focus" due to the "risk of manipulation". Broadbent says Tesco's finance function was "working well with considerable oversight".

THIN ON TOP

Analysts and investors have pointed out that the board is now very thin on retail experience. Broadbent, chairman for almost three years, was a former public official and banker.

Others on the board have experience in telecoms, media, finance and cars, while Patrick Cescau, the board's senior independent director, is a former chairman of Unilever, one of Tesco's biggest suppliers.

"In a situation such as this, the buck stops at the board," said Guy Jubb, head of governance and stewardship at Tesco investor Standard Life Investments.

Having drafted in the replacements for Clarke and McIlwee earlier than expected, the board now has two executive directors in the form of new CEO Lewis from Unilever and CFO Alan Stewart, formerly of Marks & Spencer. Stewart was appointed during the time of former CEO Clarke.

Tesco declined to comment on the retail experience of its board, or on who was involved in the planning of the Aug. 29 statement. Trading statements do not have to be checked by an external accounting firm.

But the numbers are now being pored over.

A swathe of managers have had to hand in their laptops and phones as part of the internal probe and Britain's Serious Fraud Office has said it is watching events closely.

The country's financial regulator, the Financial Conduct Authority, has launched a full investigation and lawmakers are also considering whether to grill past and present executives over the error.

(1 US dollar = 0.6103 British pound)

(Additional reporting by Dominique Vidalon in Paris and Tom Bergin in London; editing by Janet McBride)

http://finance.yahoo.com/news/tescos-250-million-pound-black-060334406.html

Warren Buffett losing US$700 million in Tesco & iCapital International Value Fund

This fund started investing in July 2009. Its performance in AUD since then is shown below together with the benchmarks MSCI ACWI index and ASX200.

Table: 1 Jul 2009 to 31 Aug 2014

		Total Return		% Change
	Currency	01-Jul-2009	31-Aug-2014
ICIVF	A$	1.0000	1.4639	46.39
MSCI ACWI	A$	1204.2423	461.3982	50.71
ASX200	A$	306.1537	5625.9000	45.22

Commentary

Mindful of the rich valuation many markets are trading at, Capital Dynamics (Australia) Ltd continues to maintain the high cash level of your fund. Is this right?

Patience is more than inactivity; it is working diligently without being anxious. Although constantly on the lookout for new opportunities, Capital Dynamics (Australia) Ltd needs to have the patience to wait for the right investment to fall into the right price range.

Unfortunately, many amateur and professional investors succumb to all sorts of pressure to avoid subpar quarterly performance or personal pressures to avoid the feeling of being left out as the market surges. They make the classic mistake of seeing investment opportunities because they want it to be there, not because they’re actually there.

An investor who has fallen into this trap, in other words, will start to gradually twist the facts, skew his own perception of the situation, and even erode his own standards for investment, just to make that investment opportunity available.

In this day and age, patience is in short supply now, which is precisely why it is a valuable core strategy. As we wait, it is interesting to note that the Oracle of Omaha, Warren Buffett, is getting hit in the Tesco debacle, having lost over US$700 million on his US1.7 billion investment, which was made in 2007. 

What is not known to many, however, is the fact that Capital Dynamics (Australia) Ltd sold all of your fund’s holdings in Tesco Plc way back in 2011. Less than a year later, Tesco dumbfounded investors by issuing a profit warning for the first time in 20 years, and reported a decline in annual profit last year. While not a massive $320 billion global conglomerate and lacking the resources and manpower Buffett has, Capital Dynamics (Australia) Ltd, a relatively small investment firm, is proudly rooted in Asia but with a global perspective and capabilities.


The NAV and distribution history of i Capital International Value Fund can be viewed at www.capitaldynamics.com.au or www.funds.icapital.biz.


Those who invested in this fund would have received this report.

Tesco Plc: Buy, Sell Or Hold?

Published in Investing on 22 August 2013

What are the long-term prospects for Tesco Plc (LON: TSCO)?

I'm always searching for shares that can help ordinary investors like you make money from the stock market.

Right now I am trawling through the FTSE 100 and giving my verdict on every member of the blue-chip index.

I hope to pinpoint the very best buying opportunities in today's uncertain market, as well as highlight those shares I feel you should hold... and those I feel you should sell!

I'm assessing every share on five different measures. Here's what I'm looking for in each company:

1. Financial strength: low levels of debt and other liabilities;

2. Profitability: consistent earnings and high profit margins; 

3. Management: competent executives creating shareholder value;

4. Long-term prospects: a solid competitive position and respectable growth prospects, and;

5. Valuation: an under-rated share price.

A look at Tesco

Today I'm evaluating Tesco (LSE: TSCO) (NASDAQOTH: TSCDY.US)], a British multinational retailer, which currently trades at 363p. Here are my thoughts:

1. Financial strength: Tesco is in solid financial position.  Net debt/operating cash flow is less than 2 times; net gearing is 50%; interest cover is an adequate 7.5 times; and free cash flow has averaged nearly £2bn per year over the last 3 years.

2. Profitability: Tesco has delivered outstanding growth for nearly two decades. However, with the continuing weakness in Europe and facing stiff competition at home, the company has struggled of late. In the last fiscal year, underlying profit before tax declined by 15% while underlying earnings per share fell by 14%. Forced to compete in price, the company's margins have contracted from to 3.4% from 5.6% the previous year.

Also, international trading profit declined by 22%, due to the impact of regulatory changes in South Korea and impairment of businesses in Turkey, Poland and the Czech Republic.

3. Management: I believe the company's new direction under Philip Clarke, which focuses on developing its "multichannel" footprint, strengthening its core UK business, and adopting a more prudent international growth strategy,  places the company in a better position moving forward.    

4. Long-term prospects: Tesco has fallen out of favour with investors recently after a rough 18 months where it was rocked by the horsemeat scandal, several quarters of declining market share and like-for-like sales, and write-offs of its Fresh and Easy US business and several UK properties of more than £1bn  and £804m, respectively.

However, despite the grim outlook, I believe Tesco's competitive position remains solid. It is still the largest UK grocer with a market share of 30% --almost doubling that of its closest rival Wal-Mart's ASDA. It also owns the UK's widest store network with around 3,000 stores and the world's largest and most profitable online supermarket, which reached a record-high revenue of over £3bn last year. In addition, it is the number one or two retailer for general merchandise in 8 out of 9 of its international markets.

Furthermore, to adapt to the rapidly changing retail environment, the company has announced new strategic objectives which include: a shift from traditional large-store formats to building its "multichannel" retail capabilities such as convenience and online retailing; focusing on its core UK operations to maintain its leading position -- the company has invested around £1bn to overhaul its superstores; and adopting a more disciplined approach to international expansion, concentrating only on markets that could deliver strong investment returns. 

5. Valuation: With a market cap of £30bn, Tesco trades at a forward price-to-earnings (P/E) ratio of 11 -slightly below its 10-year median P/E of 13 and the industry average of 12-- and a prospective dividend yield of 4%, twice covered.

My verdict on Tesco

Although recent results have been disappointing and with competition in the UK likely to remain competitive, I think the company still owns a distinct advantage with its scale and size. Also, its profitable international business --29% of the company's profits come from outside the UK--  and established online presence could be a source of future growth opportunities.

Moreover, the company intends to tighten capital spending during the next few years --around 3.5% to 4% of revenue-- which will add to its already strong cash flow. What's more, shares are trading at an undemanding P/E of 12, a discount compared to its peers Wal-Mart andCarreouflour.        

So overall, I believe Tesco at 363p looks like a buy.

http://www.fool.co.uk/news/investing/2013/08/22/tesco-plc-buy-sell-or-hold.aspx?source=uptyholnk3030001

Tesco Profit Hit by Write-Downs

Tesco Profit Hit by Write-Downs

BY KATHY GORDON

LONDON—Tesco PLC on Wednesday counted the cost of years of ambitious expansion under former chief Terry Leahy, as the U.K. supermarket operator's profit for the year was all but wiped out by payments to clean up its domestic business and a charge related to its failed U.S. venture.

Full-year net profit fell for the first time in 19 years, to £124 million ($190.5 million) from £2.81 billion a year earlier. The figure was hit by a £1.17 billion charge on the retailer's failed U.S. chain Fresh & Easy, and a £804 million write-down on property in the U.K.

http://online.wsj.com/article/SB10001424127887324493704578427933954071390.html?ru=yahoo&mod=yahoo_hs

17 April 2013
Preliminary Results Announcement 2012/13 Tesco PLC’s Preliminary Results 2012/13 were announced today at 7.00am. View all results materials including full release and Philip Clarke's blog post. Financial highlights £3.5bn trading profit – year-on-year performance largely reflects UK reinvestment Final dividend maintained at 10.13p, giving full-year dividend of 14.76p. Good progress in the UK, delivering improved results – for customers and for Tesco Strong online performance: Group sales of over £3bn for the first time – up 13% Confirming exit from the United States – process well-advanced. F+F brand clothing sales now exceed £1bn in UK alone, with +9% LFL sales growth Clear approach to future growth, capital expenditure, returns and cash, providing clarity for shareholders Philip Clarke – Chief Executive "The announcements made today are natural consequences of the strategic changes we first began over a year ago and which conclude today.  With profound and rapid change in the way consumers live their lives, our objective is to be the best multichannel retailer for customers. Our plan to 'Build a Better Tesco' is on track and I am pleased with the real progress in the UK.  We have already made substantial improvements to our customers' shopping experience, which are starting to be reflected in a better performance. We have set the business on the right track to deliver realistic, sustainable and attractive returns and long-term growth for shareholders. The consequences are non-cash write-offs relating to the United States, from which we today confirm our decision to exit, and for UK property investments which we will not pursue because of our fundamentally different approach to space. We have also faced external challenges which have affected our performance, notably in Europe and Korea. Our focus now is on disciplined and targeted investment in those markets with significant growth potential and the opportunity to deliver strong returns." View full release.

Tesco faces £1bn writedown to quit America

Tesco is facing a bill of about £1bn to quit its loss-making Fresh & Easy business in the US.

2007 - The first of Tesco's Fresh & Easy shops opens in the US. Since then the company has launched more than 200, employing more than 5,000 people. 

By Graham Ruddick

9:30PM BST 07 Apr 2013

57 Comments

The size of the charge, which will be in the form of a writedown in the value of Tesco’s assets, highlights the torrid time that Britain’s biggest retailer has faced in the US since opening in 2007.

Philip Clarke, the chief executive, is set to confirm in the company’s full-year results next week that Tesco will exit the US after launching a strategic review last year.

However, this will come at the cost of a writedown on the value of Tesco’s investments in the country, including the wholly-owned stores, leases and a major distribution centre in Riverside, California.

Mr Clarke is understood to be working on the sale of the business – with Aldi one of the potential buyers – but a closure of Fresh & Easy and then a piece-by-piece sale of the assets remains the most likely outcome.

Tesco may not reveal the future of Fresh & Easy in the results, but in order to break with the past and underline its determination to leave the US, it is understood that the FTSE 100 company will book a substantial impairment.

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Tesco is the third biggest retailer in the world. Under Sir Terry Leahy, it built successful businesses in countries ranging from Ireland to the Czech Republic, South Korea and Thailand.

But Fresh & Easy will go down as one of Sir Terry’s and Tesco’s biggest failures. Other retailers to have suffered in the US include J Sainsbury and Marks & Spencer.

Mr Clarke has been under pressure to review the loss-making Fresh & Easy since taking over from Sir Terry in March 2011.

Last October, Mr Clarke halted new store openings in the US and then announced two months later that Tesco would begin a strategic review because Fresh & Easy “will not deliver acceptable shareholder returns on an appropriate time frame in its current form”.

Mr Clarke said: “This has not been an easy decision but I know it’s the right one.”

Tesco declined to comment on Sunday night.

http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9977578/Tesco-faces-1bn-writedown-to-quit-America.html

Can Tesco Outperform Wal-Mart Stores?

By Roland Head 

March 21, 2013 

LONDON -- If you're interested in building a profitable, diversified portfolio, then you will often need to compare similar companies when choosing which share to buy next. These comparisons aren't always as easy as they sound, so in this series I compare some of the best-known names from the FTSE 100, the FTSE 250, and the U.S. stock market.

I use three key criteria -- value, income, and growth -- to compare companies to their sector peers. I've included some U.S. shares, as these provide U.K. investors with access to some of the world's largest and most successful companies. Although there are some tax implications to holding U.S. shares in a U.K. dealing account, they are pretty straightforward, and I feel they are outweighed by the investing potential of the American market.

Today I'll take a look at supermarket giants Tesco (LSE: TSCO  ) (NASDAQOTH: TSCDY  ) and Wal-Mart Stores (NYSE: WMT  ) , which owns the Asda supermarket chain in the UK.

1. ValueThe easiest way to lose money on shares is to pay too much for them. So which share looks like a better value?

Metric	Tesco	Wal-Mart
Current price-to-earnings ratio	10.9	14.4
Forecast P/E	12.5	14.7
Price-to-book ratio	1.8	3.2
Price-to-sales ratio	0.5	0.5

Tesco edges ahead of Wal-Mart in terms of value, offering a lower P/E on both a historic and forecast basis. Tesco also trades on a much lower P/B ratio than Wal-Mart, although the two supermarkets' P/S ratios are evenly matched thanks to their near-identical profit margins. The P/S ratio can be useful for comparing the profitability of different companies within the same sector.

2. IncomeWith low interest rates set to continue for the foreseeable future, dividends have become one of the most popular ways of generating an investment income. How do Tesco and Wal-Mart compare in terms of income?

Value	Tesco	Wal-Mart
Current dividend yield	3.9%	2.6%
5-year average historical yield	3.5%	2.2%
5-year average dividend growth rate	8.9%	12.6%
2013 forecast yield	3.8%	2.2%

Tesco's dividend yield is 50% higher than that of Wal-Mart. U.S. dividend yields tend to be lower than comparable U.K. yields, and although Wal-Mart's dividend has grown at a faster rate than Tesco's over the last five years, the firm's payout ratio -- the proportion of its earnings paid as dividends -- remains lower than that of Tesco.

For me, Tesco is a clear winner in the income stakes, but although both companies have an outstanding record of continuous dividend growth -- 28 years for Tesco and 39 years for Wal-Mart -- it's worth noting that Tesco's dividends have not been covered by free cash flow since 2010, unlike those of Wal-Mart. Free-cash-flow cover is a good measure of dividend safety: Using reserves or borrowed money to pay shareholder dividends is not sustainable in the long term.

3. GrowthEven if your main interest is value or income investing, you do need to consider growth. At the very least, a company needs to deliver growth in line with inflation -- and realistically, most successful companies need to grow ahead of inflation if they are to protect their market share and profit margins.

How do Tesco and Wal-Mart shape up in terms of growth?

Value	Tesco	Wal-Mart
5-year earnings-per-share growth rate	9.5%	9.7%
5-year revenue growth rate	8.6%	4.5%
5-year share price return	(2.1%)	45.4%

In terms of shareholder returns, Wal-Mart has hugely outperformed Tesco over the last five years. The U.S. firm's share price has risen by 45% during a period when Tesco's share price has languished and delivered almost zero returns. Yet underlying this, both companies have grown their earnings per share at a similar rate, and Tesco's revenue growth has moved ahead of that of Wal-Mart. What's more, over a 10-year timeframe, Tesco's shares price has risen by 120%, outperforming Wal-Mart's more modest 47% 10-year gain.

Should you buy Tesco or Wal-Mart?Tesco is in the middle of a much-publicized effort to turnaround its fortunes. Apart from improving its existing stores, one aspect of this is cutting expenditure on very large new stores. Over time, an improved focus on profitability and smaller stores should help to improve its cash flow situation and support its dividend. Although Wal-Mart's finances appear to be more robust at present, I think Tesco's greater yield is worth the risk for U.K. investors, especially given its low P/E ratio, which makes the company look better value than Wal-Mart in my view.

In terms of growth, Tesco's stronger revenue growth rate appeals to me, because over time it should facilitate stronger earnings growth than Wal-Mart, assuming other factors -- such as profit margins -- remain roughly equal.

2013's top income stock?Although both Tesco and Wal-Mart are attractive income shares, the utility sector remains one of the best places to find reliable, high-yielding income stocks. But not all utilities are equal, and some are facing serious challenges that could lead to dividend cuts.

http://www.fool.com/investing/general/2013/03/21/can-tesco-outperform-wal-mart-stores.aspx