The Tesco (LSE: TSCO) share price didn’t do a lot on Thursday morning (9 January), after the grocery store big posted a robust buying and selling replace for the festive season.

That’s regardless of CEO Ken Murphy telling us that “we delivered our biggest ever Christmas, with continued market share growth and switching gains.”

He went on to explain Tesco as “the UK’s cheapest full-line grocer for over two years.”

Market share

The third quarter to 23 November, noticed a 2.8% rise in complete like-for-like gross sales. After which a bumper 3.8% Christmas elevate pushed gross sales up 3.1% total for the mixed 19-week interval.

Maybe extra importantly for the long run, the corporate stated it hit its highest market share since 2016.

Kantar Worldpanel offers Tesco 28.5% of British market share as of 29 December. It’s edged up 1.2 share factors up to now 5 years. Aldi and Lidl additionally gained over the identical interval, with Asda and Morrisons shedding out.

The menace from the cheapies isn’t over. However they haven’t made the inroads that Tesco shareholders may need feared. And we’ve had a troublesome inflationary time for customers too, when the ‘pile it high, sell it cheap’ retailers ought to have loved a bonus.

Cracking two years

Is the subdued market response on the day a shock or a disappointment? No, I don’t assume so, not wanting on the latest previous. The Tesco share price is already up 19% up to now 12 months, and 47% over two years.

It appears just like the 2024-25 yr goes according to forecasts. So this wholesome buying and selling was largely anticipated. A lot of the optimism can have already been inbuilt to the share price. And it’s seemingly that some buyers can have been taking some revenue off the desk.

For the total yr, Tesco expects to see round £2.9bn in retail adjusted working revenue. And retail free money circulate ought to be inside the vary of £1.4bn to £1.8bn.

Best

Tesco’s success up to now couple of years must be down to its two-pronged assault on its rivals.

At one finish of the dimensions, the newest replace spoke of a “traditional Christmas dinner available at a 12% lower price year on year.” And that’s bought to be the best way to lure clients away from Aldi and Lidl.

And the corporate additionally reported a 15.5% rise in gross sales of Best model merchandise, taking the problem to its historically extra upmarket rivals like Waitrose and J Sainsbury.

What it means

Forecasts put Tesco shares on a full-year price-to-earnings ratio of near 14. For my cash, I feel that will most likely price the inventory about proper, with a modest forecast dividend yield of three.4%.

I would purchase Tesco some day. However this yr, I’ll be aiming for greater FTSE 100 dividends.

Nonetheless, wanting on the Tesco share price historical past of the previous two years, shopping for sector leaders when their costs are down must be a technique price contemplating for long-term buyers, doesn’t it?