Categories Earnings, Retail

Earnings preview: Lowe’s (NYSE: LOW) likely to gain from demand in Q3

Lowe’s Companies Inc. (NYSE: LOW) is set to report its third-quarter 2019 earnings results on Wednesday before the market opens. The results will be benefited by comparable sales, sustained operating margins, and healthy Pro demand. The bottom line will be driven by lower costs and expenses.

The company is expected to capitalize on solid demand in a healthy home improvement market and generate long-term profitable growth. The company continues to prioritize long-term growth over short-term results, which can be seen from the lesser growth rate in the total sales.

Read: JCPenney Q3 earnings review

Despite the challenging retail landscape, Lowe’s operate in a sector that still has very strong demand. Also, the company remains focused on retail fundamentals for capturing the opportunity in the retail sector. The company is likely to continue the margin improvement momentum in the second half of the year as the strategic initiatives would drive the top line higher.

In the second half of the fiscal year 2019, the company expects to focus on reducing inventory in certain areas by rolling out predictable delivery and improving on its demand planning. The strategic investments, earlier seasonal load-in, resets, increases in presentation minimums, and investments in job lot quantities drove inventory higher in the first half.

Analysts expect the company’s earnings to jump by 29.80% to $1.35 per share and revenue will rise by 2% to $17.68 billion for the third quarter. The company has surprised investors by beating analysts’ expectations thrice in the past four quarters. The majority of the analysts recommended a “strong-buy” or “buy” rating with an average price target of $125.71.

Read: Kohl’s Q3 earnings preview

For the second quarter, Lowe’s posted a 10% increase in earnings helped by higher sales as well as lower expenses. Sales rose by 0.5% and comparable sales increased by 2.3%. Comparable sales for the US home improvement business grew 3.2%. The results were driven by spring demand, strong holiday event execution, and growth in Paint and its Pro business.

For fiscal 2019, the company expects total sales to increase by about 2% and comparable sales to rise by about 3%. The operating margin is predicted to increase 310 to 340 basis points and the adjusted operating margin is projected to increase 20 to 50 basis points. Lowe’s sees earnings of $5.54 to $5.74 per share and adjusted earnings of $5.45 to $5.65 per share for the full year 2019.

Listen to on-demand earnings calls and hear how management responds to analysts’ questions

Most Popular

Does Unity Software (U) stock has more room to run?

Last month, the IPO market was in a full swing. IPOs of Snowflake (NYSE: SNOW) and JFROG (NASDAQ: FROG) had an impressive opening day in September, the former creating a

PepsiCo (PEP): Steady snacking habits amid pandemic drive strong quarter for beverage giant

PepsiCo Inc. (NASDAQ: PEP) beat market expectations on both revenue and earnings for the third quarter of 2020. The company saw the momentum continue in its snacks business while the

Does the virus-driven boom make Electronic Arts (EA) a good investment?

With more and more people turning to virtual entertainment sources, amid the virus-related movement restrictions, video game publishers like Electronic Arts (NASDAQ: EA) are witnessing unusually high demand. Not surprisingly,

One thought on “Earnings preview: Lowe’s (NYSE: LOW) likely to gain from demand in Q3

Comments are closed.

Add Comment
Loading...
Cancel
Viewing Highlight
Loading...
Highlight
Close
Top