Are Tesco plc, Royal Dutch Shell plc and SSE plc the Footsie's worst growth stocks?

Jolly Roger pirate flag
Jolly Roger pirate flag

Today I'm looking at three FTSE 100 (INDEXFTSE: UKX) giants set to suffer prolonged earnings woes.

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Supply struggles

A stream of worrying supply-related updates has put fresh pressure on oil prices in recent days, and with it the earnings outlook over at Royal Dutch Shell (LSE: RDSB).

West Texas Intermediate (WTI) crude has finally crept back below $40 per barrel this week, the slippery commodity hitting its cheapest level for four months. The fall below this critical milestone has led many to predict a heavy plunge in the weeks ahead.

Producers in the US are steadily getting back to the pump, adding to already-plentiful flows from OPEC and Russia -- Baker Hughes advised that the country's rig count rose for the fifth consecutive week last Friday. And global demand isn't strong enough to take a bite out of historically-high inventories.

Shell endured a 72% earnings slide (on a current cost of supplies basis) during April-June, to $1.05bn, as the top line continued to drag. And the company's decision to keep selling assets and cut exploration budgets is likely to hamper a bottom-line recovery once the crude market imbalance rightens itself.

I reckon those seeking hot growth prospects should steer well clear of Shell.

Blackout beckons?

With Britain becoming increasingly-acclimatised to 'switching' -- from bank accounts and mobile phone providers to utilities suppliers -- I reckon power play SSE (LSE: SSE) is likely to remain under significant pressure.

Indeed, the UK's decision exit the European Union is likely to intensify the hunt for cheaper energy providers as household budgets come under the cosh in the months ahead.

SSE endured another heavy blow to its account book during April-June, with another 50,000 clients departing to the likes of OVO Energy and First Utility. The electricity giant now boasts 8.16m electricity and gas accounts, down from 8.49m just a year ago.

Like the rest of the so-called 'Big Six', SSE is likely to have to embark on extra rounds of earnings-sapping tariff cuts to slow down the revolving door. Given this environment, I don't expect the firm's bottom line to explode higher any time soon.

Trolley troubles

The same pressure on householders' wallets is likely to heap further pressure on Tesco (LSE: TSCO) looking ahead.

The grocer is already fighting an uphill battle to maintain market share as the popularity of its cut-price rivals continues to swell. Latest Kantar Worldpanel data showed takings at Aldi and Lidl canter 6.2% and 4.5% higher during the three months to 17 July. Tesco was forced to swallow a 0.7% sales decline, by comparison.

And further pain can be expected as the competition ups the ante. The discounters are steadily increasing their physical footprint up and down the country, while Amazon's recent entry into the food market throws a spanner in the works for Tesco's own online division, currently the only reliable sales generator across the group.

I reckon these hurdles make the Cheshunt chain an unlikely bounce-back hero, and expect Tesco's share of the market to continue sliding in the years ahead.

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Royston Wild has no position in any shares mentioned. The Motley Fool UK has recommended Royal Dutch Shell B. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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