Lowe's Manages By Staying Cautious (LOW, HD)

Lowe’s Companies Inc. (NYSE: LOW) managed to actually beat earnings projections and managed a gain in revenues.  The hardware and home improvement store posted earnings per share with a drop of 4.5% to $0.64 EPS, while revenues rose 2.4% to $14.5 Billion.  Both the top-line and bottom-line earnings were above First Call estimates of $0.56 EPS and $14.1 Billion in sales.

While it beat earnings, it is cautious with projections ahead.  Lowe’ssees a 1% sales gain in all of 2008 compared to 2007 with same storesales expected at -6% to-7% for the year.  The company also putearnings in a range of of $1.48 to $1.56 EPS versus $1.50 estimates.  There were not really many changes to earnings estimates over the last 90 days for this quarter report, but estimates have come in $0.04 for 2008 over the last 90 days and estimates for 2009 (Jan2010 technically) have come down $0.15 over the lasy 90 days to $1.59 EPS.

Although Lowe’s is very cautious on the macroeconomic pressurescurrently seen in the market, Wall Street seems initially happy aboutthe performance seen in a tough environment.  Shares are indicated upabout 4% pre-market at $25.65 with about 100,000 shares having tradedhands.

The 52-week trading range is $18.00 to $32.53.  The strength isactually enough to have an impact on shares of DJIA component HomeDepot Inc. (NYSE: HD), where shares are up about 1.5% at $27.95 with a52-week trading range of $20.76 to $38.54.

If Lowe’s keeps staying cautious on the economy and managing its expenses on the P&L statement it might not even need any natural disasters to beat lower earnings estimates ahead.

Jon C. Ogg
August 18, 2008