Tesco (LSE: TSCO) shares hit the skids in mid-March. And by the point the UK’s largest grocery store chain posted full-year outcomes on 10 April, we have been taking a look at a 20% fall from February’s 52-week excessive. That included a 6% drop on the day of the outcomes, which have been blended at greatest.

However anybody who invested £10,000 on that day might already be taking a look at an funding price £11,780. What can we be taught from that?

I’m changing into more and more satisfied that UK investing sentiment may be turning to a brand new rule of thumb for disappointing information days: promote first, suppose later. And that implies ‘buy on the dips’ may not be a foul tactic — with some key cautions.

Quick-term gloom

The worldwide commerce shock set in movement by US President Trump’s tariff insurance policies hit the outlook for economies globally. Tesco doesn’t promote within the US, so it shouldn’t be instantly affected by any recession which may occur there — as economists are more and more warning might occur. However commerce wars would have an effect on the UK financial system too, and that’s unhealthy information.

And within the UK, Tesco spoke of “a further increase in the competitive intensity of the UK market“. It seems supermarket price wars are on again. The company now expects “adjusted operating profit of between £2.7bn and £3.0bn” within the 2025/26 12 months, in comparison with the £3.1bn reported for 2024/25.

Market share

The newest information from Kantar in April confirmed an additional slowing in grocery store gross sales progress. And it’s instances like this that give the cut-price sellers the sting and assist them claw again market share from the massive operators, proper? Effectively, mistaken, it appears. In opposition to a background of weakening gross sales throughout the sector, Tesco has elevated its market share to 27.9% of the UK’s groceries market.

Smaller and nimbler companies would possibly be capable of seize the headlines now and again. However you already know what the market leaders have? They’ve the monetary muscle to combat it out and emerge as winners. How usually has Tesco been written off within the face of UK newcomers like Lidl and Aldi? To date, the rumours of its demise have been exaggerated each time.

What ought to we do?

Does the thought of shopping for on the dips sound dangerously near attempting to time the market? Effectively, shopping for simply because a share price has fallen is usually a dangerous factor to do. And historical past exhibits that traders who attempt to predict the dips have a tendency to finish up shedding cash, a good bit of it in buying and selling prices.

But when we’ve already achieved our research on an organization? And we resolve we like its long-term prospects and are pondering of shopping for anyway? That’s once we can use price dips to our benefit.

Tesco is on an undemanding ahead price-to-earnings (P/E) ratio of 15, dropping to 12 by 2027 on present forecasts. The three.6% forecast dividend yield may not be the FTSE 100‘s biggest. But it’s respectable and I anticipate it to be progressive within the coming years.

Tesco remains to be one I believe long-term traders ought to take into account, particularly on any additional dips.