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Why Is Lowe's (LOW) Up 5.2% Since Last Earnings Report?
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A month has gone by since the last earnings report for Lowe's (LOW - Free Report) . Shares have added about 5.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Lowe's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Lowe's Q1 Earnings Surpass Estimates, Sales Fall Y/Y
Lowe’s posted better-than-expected results in first-quarter fiscal 2023, with the top and bottom lines beating the Zacks Consensus Estimate. While earnings improved from the previous fiscal year’s quarterly reading, sales fell on a year-over-year basis.
Quarter in Detail
Adjusted earnings per share (EPS) of $3.67 surpassed the Zacks Consensus Estimate of $3.48 and rose 5% from the first-quarter fiscal 2022 tally.
Net sales of $22,347 million decreased 5.5% year over year but came ahead of the consensus estimate of $21,563 million. Comparable sales (comps) fell 4.3% in the quarter under review, driven by lumber deflation, adverse weather and weak DIY discretionary sales.
Gross profit slipped 6.5% year over year to $7,527 million, while the gross margin contracted 30 basis points (bps) to 33.7%. Operating income amounted to $3,288 million, down 0.4% year over year. However, the operating margin expanded 70 bps from the year-earlier quarter to 14.7%.
Other Financial Aspects & Developments
LOW ended the quarter with cash and cash equivalents of $2,950 million, long-term debt (excluding current maturities) of $35,863 million and shareholders’ deficit of $14,710 million.
Lowe’s generated cash flow from operations of $2,106 million for the first quarter of fiscal 2023. Capital expenditures amounted to $0.4 million for the aforementioned period. For fiscal 2023, LOW expects a capex of up to $2 billion.
In the reported quarter, Lowe’s bought back 10.6 million shares for $2.1 billion and paid out dividends of $633 million.
Outlook
Management revised guidance for fiscal 2023 owing to greater-than-expected lumber deflation and weaker-than-expected DIY discretionary sales. LOW now expects revenues of $87-$89 billion versus the earlier projection of $88-$90 billion. In fiscal 2022, Lowe’s revenues were $97.1 billion.
Comparable sales in fiscal 2023 are envisioned in the range of -2% to -4%, compared with the previous projection of flat to a 2% fall. The adjusted operating margin is expected to be 13.4-13.6% versus 13.6-13.8% anticipated earlier. Management anticipates earnings per share of $13.20-$13.60 for the fiscal year versus the earlier guidance of $13.60-$14.00 and $10.17 per share earned in fiscal 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -7.29% due to these changes.
VGM Scores
At this time, Lowe's has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Lowe's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Lowe's belongs to the Zacks Building Products - Retail industry. Another stock from the same industry, Home Depot (HD - Free Report) , has gained 3.3% over the past month. More than a month has passed since the company reported results for the quarter ended April 2023.
Home Depot reported revenues of $37.26 billion in the last reported quarter, representing a year-over-year change of -4.2%. EPS of $3.82 for the same period compares with $4.09 a year ago.
Home Depot is expected to post earnings of $4.46 per share for the current quarter, representing a year-over-year change of -11.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.3%.
Home Depot has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Why Is Lowe's (LOW) Up 5.2% Since Last Earnings Report?
A month has gone by since the last earnings report for Lowe's (LOW - Free Report) . Shares have added about 5.2% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Lowe's due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Lowe's Q1 Earnings Surpass Estimates, Sales Fall Y/Y
Lowe’s posted better-than-expected results in first-quarter fiscal 2023, with the top and bottom lines beating the Zacks Consensus Estimate. While earnings improved from the previous fiscal year’s quarterly reading, sales fell on a year-over-year basis.
Quarter in Detail
Adjusted earnings per share (EPS) of $3.67 surpassed the Zacks Consensus Estimate of $3.48 and rose 5% from the first-quarter fiscal 2022 tally.
Net sales of $22,347 million decreased 5.5% year over year but came ahead of the consensus estimate of $21,563 million. Comparable sales (comps) fell 4.3% in the quarter under review, driven by lumber deflation, adverse weather and weak DIY discretionary sales.
Gross profit slipped 6.5% year over year to $7,527 million, while the gross margin contracted 30 basis points (bps) to 33.7%. Operating income amounted to $3,288 million, down 0.4% year over year. However, the operating margin expanded 70 bps from the year-earlier quarter to 14.7%.
Other Financial Aspects & Developments
LOW ended the quarter with cash and cash equivalents of $2,950 million, long-term debt (excluding current maturities) of $35,863 million and shareholders’ deficit of $14,710 million.
Lowe’s generated cash flow from operations of $2,106 million for the first quarter of fiscal 2023. Capital expenditures amounted to $0.4 million for the aforementioned period. For fiscal 2023, LOW expects a capex of up to $2 billion.
In the reported quarter, Lowe’s bought back 10.6 million shares for $2.1 billion and paid out dividends of $633 million.
Outlook
Management revised guidance for fiscal 2023 owing to greater-than-expected lumber deflation and weaker-than-expected DIY discretionary sales. LOW now expects revenues of $87-$89 billion versus the earlier projection of $88-$90 billion. In fiscal 2022, Lowe’s revenues were $97.1 billion.
Comparable sales in fiscal 2023 are envisioned in the range of -2% to -4%, compared with the previous projection of flat to a 2% fall. The adjusted operating margin is expected to be 13.4-13.6% versus 13.6-13.8% anticipated earlier. Management anticipates earnings per share of $13.20-$13.60 for the fiscal year versus the earlier guidance of $13.60-$14.00 and $10.17 per share earned in fiscal 2022.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -7.29% due to these changes.
VGM Scores
At this time, Lowe's has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Lowe's has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Lowe's belongs to the Zacks Building Products - Retail industry. Another stock from the same industry, Home Depot (HD - Free Report) , has gained 3.3% over the past month. More than a month has passed since the company reported results for the quarter ended April 2023.
Home Depot reported revenues of $37.26 billion in the last reported quarter, representing a year-over-year change of -4.2%. EPS of $3.82 for the same period compares with $4.09 a year ago.
Home Depot is expected to post earnings of $4.46 per share for the current quarter, representing a year-over-year change of -11.7%. Over the last 30 days, the Zacks Consensus Estimate has changed -0.3%.
Home Depot has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.