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approval. The share price of the company is fully priced now. Annual Income Statement Data Actuals in M GBP Fiscal Period March 2015 2016 2017 2018 2019 Sales 25 224 27 456 26 224 28 456 32 412 EBITDA 0 316 0 425 1 316 1 425 1 515 Operating profit (EBIT) 676 682 688 694 723 Pre-Tax Profit (EBT) 691 597 503 409 239 Net income 513 445 377 309 219 P/E ratio 16,0x 18,0x 16,0x 18,0x 25,9x EPS ( GBp ) 16,4 13,2 16,5 13,3 9,10
SAINSBURY AND TESCO FINANCIAL ANALYSIS 4 Dividend per Share ( GBp ) 10,2 10,2 10,2 10,2 11,0 Yield 3,86% 4,27% 3,86% 4,27% 4,67% The profits for Sainsbury’s in the year ending March 2019 was £239m before tax and £219m after tax compared to the year 2014/2015 when the company was operating at loss. In general, the company has been struggling to improve its dropping sales and a slowdown in how the store numbers were growing. The company is now focusing on how it can merge with competitors such as Asda but its goal of surpassing Tesco did failed terribly ( Adewuyi, 2016) . Tesco is a British multinational general merchandise and groceries retailer headquartered in Welwyn Garden City in United Kingdom. Tesco is the third world largest retailer in terms of gross revenue and 9 th in terms of revenues ( Bentham, 2018) . The company has more than 6800 shops with subsidiaries such as Tesco Mobile, Tesco Ireland, Tesco Bank, Tesco Lotus and Londis. The company offers a range of products such as telecoms, financial services, groceries and consumer goods. The firm had a total revenue of £63911m and an operating income of £2206m. The net income of Tesco is currently £1322m as at 2019 compared to £1203m in 2018. The profit generated by the company is distributed as dividends to investors twice per year.
SAINSBURY AND TESCO FINANCIAL ANALYSIS 5 Actuals in M GBP Estimates in M GBP Estimates in M GBP Estimates in M GBP Fiscal Period February 2017 2018 2019 Sales 55917 57491 63 911 EBITDA 2141 2415 3 503 Operating profit (EBIT) 1280 1644 2 206 Pre-Tax Profit (EBT) 841 1542 1 674 Net income -40 1206 1 322 P/E ratio 12.2x 14,2x 17,1x EPS ( GBp ) 11.2 12.36 13,6 Dividend per Share ( GBp ) 5.77 4.77 5,77 Yield 2.29 2.41 2,49% Over the recent past, the store numbers of Tesco has stagnated. The company is facing stiff competition from German discounters such as Aldi and Lidl. Profitability ratios Profitability Tesco Sainsbur y Operating Margin (EBIT / Sales) 4,59% 3,42% Operating Leverage (Delta EBIT / Delta Sales) 26,5x - Net Margin (Net Profit / Revenue) 2,18% 1,40% ROA (Net Profit / Asset) 2,34% 1,94% ROE (Net Profit / Equities) 10,8% 5,79% Rate of Dividend 57,2% 61,3% Tesco has a profitability measured by the Return on Assets (ROA) of 2.34% compared to 1.94% of Sainsbury. The higher profitability in Tesco is attribute to the ability of the company to attract efficient and good investors with the goal of sustaining a strong financial strategy in the earning future of the trend. Sainsbury a higher than average ROA indicates the ability of the company to timely collection of revenue and effective management strategies for promotion of their inventories.
SAINSBURY AND TESCO FINANCIAL ANALYSIS 6 The return on equity (ROE) for Tesco is higher at 10.8% than Sainsbury of 5.79%. The higher returns on equity is attributed to Tesco’s diversified investment in sectors such as real estate investments and financial sector ( Cuthbertson & Ezell, 2015) . The increased returns on equity is also owed to the company’s long history of effective management of operation of the company and shareholders’ equity. The huge proceeds from Tesco doubled due to increased investments

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