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Lowe's Q3 Preview: Can Shares Move Higher Post-Earnings?
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The Q3 earnings cycle is winding down, with most companies already unveiling quarterly results. The cycle has primarily been better-than-expected, helping to keep sentiment in check and drive the market higher.
And this week, we’ll receive results from home-improvement retailer Lowe’s (LOW - Free Report) . LOW shares have been slightly disappointing in 2023, up 5% and underperforming relative to the general market.
But how does the company shape up heading into the release? We can use results from a peer, Home Depot (HD - Free Report) , as a small guide. Let’s take a closer look.
Home Depot Q3
Concerning headline figures, Home Depot exceeded the Zacks Consensus EPS Estimate modestly and reported revenue 0.5% ahead of expectations, with both items lower than the year-ago figures.
Like other recent releases, the results were negatively impacted by a slowdown in big-ticket discretionary categories, a phenomenon that Lowe’s has similarly faced. Many home-improvement retailers saw pulled-forward demand, mainly as consumers took on big home-improvement projects during lockdowns.
Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
In addition, the company narrowed its prior FY23 guidance. HD now expects sales and comparable sales to decline between 3% and 4% from FY22, and it is also expecting an operating margin between 14.2% and 14.1%.
Nonetheless, the market took the results in stride, with HD shares seeing positive price action following the results.
Image Source: Zacks Investment Research
Lowe’s
Analysts have been bearish for the upcoming release, with the $3.05 Zacks Consensus EPS Estimate down nearly 4% since the end of August and reflecting a pullback of roughly 7% from the year-ago period.
Image Source: Zacks Investment Research
Top line revisions have also hit the tape, as the $20.9 billion Zacks Consensus Estimate is down 1.1% over the same period and reflects a pullback of roughly 11% year-over-year.
Image Source: Zacks Investment Research
It’s worth noting that analysts have lowered their earnings outlooks across multiple timeframes, pushing Lowe’s into an unfavorable Zacks Rank #4 (Sell). As we can see below, analysts have nearly been in full agreement.
Image Source: Zacks Investment Research
Taking a closer look at Customer Transactions can provide us with a deeper view of the demand Lowe’s has been seeing. For the quarter, the Zacks Consensus Estimate for Customer Transactions stands at 206 million, reflecting a pullback of roughly 8% from the year-ago period.
As we can see below, the company has fallen short of consensus Customer Transaction estimates in back-to-back releases, snapping a streak of positive surprises prior.
Image Source: Zacks Investment Research
It’s reasonable to assume that Lowe’s will speak on big-ticket discretionary items similar to Home Depot, with the previously mentioned pulled-forward demand phenomenon also hampering quarterly results as of late.
Bottom Line
Earnings season continues to wind down, with most notable companies already delivering quarterly results. Still, many important companies are yet to report, including Lowe’s (LOW - Free Report) .
A peer, Home Depot (HD - Free Report) , posted results above expectations, with top and bottom line results below the year-ago period. Nonetheless, shares saw positivity following the release, perhaps reflecting investors' confidence in a turnaround regarding big-ticket discretionary purchases in the periods to come.
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Lowe's Q3 Preview: Can Shares Move Higher Post-Earnings?
The Q3 earnings cycle is winding down, with most companies already unveiling quarterly results. The cycle has primarily been better-than-expected, helping to keep sentiment in check and drive the market higher.
And this week, we’ll receive results from home-improvement retailer Lowe’s (LOW - Free Report) . LOW shares have been slightly disappointing in 2023, up 5% and underperforming relative to the general market.
But how does the company shape up heading into the release? We can use results from a peer, Home Depot (HD - Free Report) , as a small guide. Let’s take a closer look.
Home Depot Q3
Concerning headline figures, Home Depot exceeded the Zacks Consensus EPS Estimate modestly and reported revenue 0.5% ahead of expectations, with both items lower than the year-ago figures.
Like other recent releases, the results were negatively impacted by a slowdown in big-ticket discretionary categories, a phenomenon that Lowe’s has similarly faced. Many home-improvement retailers saw pulled-forward demand, mainly as consumers took on big home-improvement projects during lockdowns.
Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
In addition, the company narrowed its prior FY23 guidance. HD now expects sales and comparable sales to decline between 3% and 4% from FY22, and it is also expecting an operating margin between 14.2% and 14.1%.
Nonetheless, the market took the results in stride, with HD shares seeing positive price action following the results.
Image Source: Zacks Investment Research
Lowe’s
Analysts have been bearish for the upcoming release, with the $3.05 Zacks Consensus EPS Estimate down nearly 4% since the end of August and reflecting a pullback of roughly 7% from the year-ago period.
Image Source: Zacks Investment Research
Top line revisions have also hit the tape, as the $20.9 billion Zacks Consensus Estimate is down 1.1% over the same period and reflects a pullback of roughly 11% year-over-year.
Image Source: Zacks Investment Research
It’s worth noting that analysts have lowered their earnings outlooks across multiple timeframes, pushing Lowe’s into an unfavorable Zacks Rank #4 (Sell). As we can see below, analysts have nearly been in full agreement.
Image Source: Zacks Investment Research
Taking a closer look at Customer Transactions can provide us with a deeper view of the demand Lowe’s has been seeing. For the quarter, the Zacks Consensus Estimate for Customer Transactions stands at 206 million, reflecting a pullback of roughly 8% from the year-ago period.
As we can see below, the company has fallen short of consensus Customer Transaction estimates in back-to-back releases, snapping a streak of positive surprises prior.
Image Source: Zacks Investment Research
It’s reasonable to assume that Lowe’s will speak on big-ticket discretionary items similar to Home Depot, with the previously mentioned pulled-forward demand phenomenon also hampering quarterly results as of late.
Bottom Line
Earnings season continues to wind down, with most notable companies already delivering quarterly results. Still, many important companies are yet to report, including Lowe’s (LOW - Free Report) .
A peer, Home Depot (HD - Free Report) , posted results above expectations, with top and bottom line results below the year-ago period. Nonetheless, shares saw positivity following the release, perhaps reflecting investors' confidence in a turnaround regarding big-ticket discretionary purchases in the periods to come.