What to Look for in Lowe’s Earnings

August 16, 2016 by Chris Lange

Lowe’s Companies Inc. (NYSE: LOW) is set to release its most recent quarterly results before the markets open on Wednesday. With Home Depot’s earnings already in the books — and not exactly impressive — the onus is on Lowe’s to win this earnings showdown.

Home Depot’s earnings at a glance are $1.97 in earnings per share (EPS) on $26.5 billion in revenue, essentially in line with consensus estimates from Thomson Reuters. Home Depot posted EPS of $1.73 and $24.83 billion in revenue in the same period of last year. These earnings not only were more or less in line with estimates but par for the course.

As for Lowe’s, consensus estimates are $1.42 in EPS and revenue of $18.45 billion. In the same period of last year, the retailer posted EPS of $1.20 on $17.35 billion in revenue.

Housing and construction are still going strong from a technical standpoint, and both companies are coming up to previous highs after some consolidation. They are also much closer to the new money being added to the system, since housing loans are generally third in line after stocks and bonds to have prices bid up.

Overall, analysts are expecting that these companies are benefiting from lower gasoline prices this summer, which in effect would allow for more consumer spending on home projects.

Ahead of the earnings report, a few analysts weighed in on Lowe’s:

  • JPMorgan reiterated a Buy rating with an $89 price target.
  • Cantor Fitzgerald reiterated a Buy rating with an $85 price target.
  • Stifel has a Buy rating with a $100 price target.
  • Goldman Sachs reiterated a Buy rating.
  • Morgan Stanley reiterated an Overweight rating.
  • Deutsche Bank reiterated a Buy rating with an $86 price target.
  • BTIG Research has a Buy rating with a $90 price target.
  • Citigroup has a Buy rating with a $90 price target.

So far in 2016, Lowe’s has performed more or less in line with the broad markets, with the stock up 8.5%. Over the past 52 weeks, the stock is actually up 15%.

Shares of Lowe’s were trading at $81.50 on Tuesday, with a consensus analyst price target of $87.46 and a 52-week trading range of $62.62 to $83.65.

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