Food sellers are often popular unthreatening paradise in such turbulent economic times. Already Tesco‘S (LSE: TSCO) The price of shares has fallen over the past week, first in fear of the potential influence of global trading wars, and recently on the signs that “price wars” are to get worse.

At 324.4, the Tesco shares have recently been 4.4% lower on Monday (March 17). They have now been at the cheapest level since last summer.

Municipal analysts believe, however, that the largest British retailer will escalate in the next 12 months. So I should consider opening participation in FTSE 100 A company that uses price recovery?

26% reflection?

As with most shares, Tesco’s share prices occupy a wide range of height and falls. From the most despondent side, one of the analysts believe that the company will fall by 2.6% from current levels in the following year, to 316 pens per share.

At the other end of the scale, one particularly stubborn broker believes that the supermarket will escalate by 35.7% from current levels to 440p.

In general, city analysts are quite hopeful compared to the price of Tesco shares from now to March 2026. The average target price among 15 brokers with the company’s ratings is 407.2 pence.

This accounts for 25.5% of the bonus to today’s price.

Cheap on paper

After the Monday decline, Tesco shares have fallen a lot of 14.2% over the past week. This means that they are now trading on a valuation far below the five -year average.

They changed retail trade in price to profit (P/E) of 19 to 20 times on average since March 2020. Today this number is much more modest 12.3 times.

For FTSE inventory fans, such a low valuation can leave a range for a rapid price reception.

However, this is not a view I divide. I think Tesco shares a lower valuation. I also think that there is a good chance that the company will still fall.

Huge competition

As described at the summit, the price of Tesco shares fell on the signs that industry competition will escalate by rear or two.

On Friday, asda-threads about the size of the supermarket in Great Britain-she got to apply for apply “Quite a significant war gearbox“Investing in prices to revive sales. Price wars are nothing novel in the food sector, but it increases the additional market intensity that has already squeezed Aldi and Lidl rebate chains.

Supermarkets may not prosecute the prices of lower revenue costs. Or they can join the fight and watch their margins rejected.

This is a sedate problem, considering how slender margins of Tesco profit are already (4.5% between March and August last year, according to the latest finances).

Difficult economic climate causes a threat, discounting even sharper, because buyers are chasing value. With these German operators also involved in long -term expansion, the problem will not disappear in the near future.

Verdict

For these reasons, I do not want to buy Tesco shares for my portfolio, even when brokers tilt the rapid reception of the price.

The plus is wholesale and bank divisions of the company ensure good opportunities to escalate earnings. It also has significant brand strength and customer loyalty via the Clubcard program.

But in balance I think that the company has too much risk, even at today’s beaten prices.