Why Lowe's Q1 Was Especially Strong

Lowe’s Companies Inc. (NYSE: LOW) released its fiscal first-quarter financial results before the markets opened on Wednesday. The home improvement retailer said that it had $1.77 in earnings per share (EPS) and $19.7 billion in revenue. That compared with consensus estimates of $1.31 in EPS and $18.08 billion in revenue. In the same period of last year, the company said it had EPS of $1.22 on $17.74 billion in revenue.

During the latest quarter, comparable sales increased 11.2% year over year. Comparable sales specifically for the U.S. home improvement business increased 12.3%.

Considering the uncertain economic outlook, Lowe’s raised $4 billion in senior unsecured notes and increased the capacity of its revolving credit facilities by $770 million. After repaying $500 million of fixed-rate notes due April 15, 2020, the company now has $6.0 billion of cash and cash equivalents, as well as $3 billion in undrawn capacity on its revolving credit facilities, which will be available for any unanticipated liquidity needs.

Lowe’s also decided to suspend share repurchases. It does not expect to repurchase any more shares this year beyond what was executed in the first quarter. The company repurchased 9.6 million shares for $947 million under its share repurchase program, and paid $420 million in dividends in the first quarter.

The company did not issue guidance for the fiscal 2020 full year. Consensus estimates call for $5.92 in EPS and $72.57 billion in revenue for the year.

Marvin R. Ellison, Lowe’s president and CEO, commented:

In late February, we shifted our priorities in response to the COVID-19 pandemic, and immediately focused on how best to serve the needs of our communities during this unprecedented time. Our highest priority remains the health and safety of our associates and community, and we have demonstrated that commitment in the first quarter through an investment of $340 million, including support for healthcare workers and first responders.

Lowe’s stock traded up almost 3% early Wednesday to $120.17 a share. The 52-week range is $60.00 to $126.73, and the consensus price target is $116.56.