Investing

Earnings Previews: Lowe's, Target, TJX

All three major U.S. equity indexes posted solid gains Friday: the Nasdaq Composite added 3.8%, the S&P 500 added 2.4% and the Dow rose 1.5%. Investors gave the impression that the market was oversold, following Thursday’s blood bath. The two-year Treasury note added eight basis points and the 10-year added 12 in a mostly losing effort to attract buyers.

Later this week, we shall get the U.S. Census Bureau’s report on retail sales in April (Tuesday), followed by the report on housing starts (Wednesday), and existing home sales and new claims for unemployment benefits (Thursday).

We already have previewed Sea Limited, Shoals Technologies and Take-Two Interactive, along with Home Depot, JD.com, Macy’s and Walmart, all reporting Monday or Tuesday.

Here is a look at two companies due to report results before markets open on Wednesday.

Lowe’s

Over the past 12 months, the share price of Lowe’s Companies Inc. (NYSE: LOW) has risen by less than 1%. Since a 52-week high posted in mid-December, the shares have plunged by 24%. Analysts and investors will be paying special attention to the company’s outlook in the face of inflation. Sales to professional builders and contractors are expected to be stable, but homeowners may be more cautious, given inflationary pressure.

Of 29 analysts covering the company, 22 rate the shares as a Buy or Strong Buy. Another seven Hold ratings. At a recent price of around $194.00 a share, the upside potential to a median price target of $260.00 is 34%. At the high price target of $300.00, the upside potential is 54.6%.

Fiscal first-quarter revenue is forecast at $23.72 billion, which would be up 11.2% sequentially and 3.0% higher year over year. Adjusted earnings per share (EPS) is expected to come in at $3.22, up 81.2% sequentially and a penny more year over year. For the full 2023 fiscal year, analysts expect EPS of $13.40, up 11.3%, on sales of $98 billion, up 1.8%.

Lowe’s stock trades at 14.5 times expected 2023 EPS, 13.2 times estimated 2023 earnings of $14.73 and 11.8 times estimated 2024 earnings of $17.23 per share. The stock’s 52-week range is $182.08 to $263.31, and the company pays an annual dividend of $3.20 (yield of 1.65%). Total shareholder return for the past year is negative 1.7%.

Target

Target Corp. (NYSE: TGT) stock has added about 9.8% to its share price over the past 12 months. The company recently made several changes to its executive leadership team, but investors will be paying more attention to the company’s same-store sales results. Are consumers still spending, and what does the company expect going forward? Comparisons to last year’s sales will be further compressed by the jump in sales last year following the lifting of pandemic restrictions and federal payments to consumers.

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