Back to top

Analyst Blog

Driven by resurgence in the U.S. housing market, Lowe’s Companies Inc. (LOW - Analyst Report) posted robust results for the third quarter of fiscal 2013, with adjusted earnings rising 19.2% year over year to 31 cents per share. Moreover, quarterly adjusted earnings were in line with the Zacks Consensus Estimate.

On a reported basis, that is, including a charge of 2 cents related to long-lived asset impairments, the company’s fourth-quarter earnings came in at 29 cents per share.

The stock witnessed a 5.6% rise in total revenue to $11,660 million and handily beat the Zacks Consensus Estimate of $11,645 million. Moreover, comparable-store sales rose 3.9% on a consolidated basis in the quarter.

The year-over-year top-line growth was primarily driven by the company’s effective capitalization of the rebounding domestic housing market. During the quarter, Lowe’s witnessed solid performance in its home improvement business.

In dollar terms, gross profit rose 6.8% year over year to $4,042 million. Moreover, gross profit margin improved 40 basis points to 34.67% mainly due to lower cost of sales as a percentage of net sales.

Fiscal 2013 Performance – A Synopsis

The company generated net sales of $53,417 million in the quarter, up 5.7% from $50,521 million in fiscal 2012. Moreover, the company’s net sales beat the Zacks Consensus Estimate of $53,395 million. Adjusted earnings for the period came in at $2.16 per share, up 27.8% from $1.69 earned in fiscal 2012 while remain in line with the Zacks Consensus Estimate. On a reported basis, Lowe’s earnings per share came in at $2.14.

Other Financial Aspects

Lowe’s ended the quarter with cash and cash equivalents of $391 million, long-term debt (excluding current maturities) of $10,086 million and shareholders’ equity of $11,853 million, reflecting a debt-to-capitalization ratio of approximately 46%.

During the quarter, the company repurchased $958 million worth of its common stock and distributed $189 million as dividends. During the fiscal, Lowe’s repurchased $3.7 billion worth of its common stock and distributed $733 million as dividends.

Along with its earnings release, Lowe’s announced that its board of directors has approved a new share repurchase program worth $5.0 billion. Now, the company has total authorization worth $6.3 billion including the previous remaining authorization of $1.3 billion.

Fiscal 2013 Outlook

After concluding fiscal 2013, Lowe’s initiated its fiscal 2014 outlook. The company expects its sales and comparable-store sales to register year-over-year growth of approximately 5% and 4% respectively. Operating margin is expected to improve by nearly 65 basis points while effective tax rate is projected to be nearly 38.1%.

On the basis of the above assumptions, Lowe’s anticipates its earnings for the fiscal 2014 to be approximately $2.60 per share. Currently, the Zacks Consensus Estimate for the fiscal stands at $2.66 per share.

Moreover, the company intends to open 15 home improvement stores and 5 hardware stores in the fiscal. As of Jan 31, 2014, the company operated 1,832 stores in the United States, Canada and Mexico.

Other Stocks to Consider

Currently, Lowe’s carries a Zacks Rank #3 (Hold). Other better-performing stocks in the retail industry space include Deckers Outdoor Corp. (DECK - Analyst Report), Francesca’s Holdings Corp. (FRAN - Snapshot Report) and Iconix Brand Group, Inc. (ICON - Analyst Report). All of these have a Zacks Rank #2 (Buy).

Please login to or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research


Are you a new Zacks Member or a visitor to

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
UTD THERAPE… UTHR 117.83 +28.51%
TRIQUINT SE… TQNT 20.67 +6.52%
RF MICRO DE… RFMD 12.47 +6.04%
VASCO DATA… VDSI 14.77 +4.68%
BANCO DO BR… BDORY 15.53 +3.95%