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Lowe's (LOW) Q4 Earnings Top, Stock Up on Promising View
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After two straight quarters of earnings miss, Lowe’s Companies Inc. (LOW - Free Report) posted positive earnings surprise of 8.9% in the fourth quarter of fiscal 2016. Net sales also outperformed the Zacks Consensus Estimate, after missing the same in the preceding two quarters. The better-than-expected results prompted management to provide an encouraging outlook for fiscal 2017.
Consequently, shares of this North Carolina based company jumped 5.7% during pre-market trading hours.
In the recent past, Lowe’s shares have been hit hard due to lower-than-expected results in the second and third quarters. The stock has underperformed the Zacks categorized Building Product-Retail/Wholesale industry in the last six months. In the said time frame, the stock has declined 3.3%, while the overall industry advanced 5.2%. We believe that the company’s outstanding performance in the final quarter is likely to reverse this trend.
The home improvement retailer posted adjusted earnings of 86 cents a share that surpassed the Zacks Consensus Estimate of 79 cents, and surged 45.8% from 59 cents delivered in the year-ago quarter.
Net sales of $15,784 million came ahead of the Zacks Consensus Estimate of $15,280 million, and increased 19.2% year over year. The company’s sales increased can be attributed to its efforts to provide a better omni-channel customer experience and an improvement in the housing market. Comparable sales (comps) climbed 5.1% basis during the quarter, while comps for the U.S. business also increased by an equivalent rate.
Gross profit soared 18.4% year over year to $5,432 million, however, gross profit margin contracted roughly 25 basis points to 34.4%.
Other Financial Aspects
Lowe’s, which competes with The Home Depot, Inc. (HD - Free Report) , ended the quarter with cash and cash equivalents of $558 million, long-term debt (excluding current maturities) of $14,394 million and shareholders’ equity of $6,434 million.
During the quarter, the company kept its promise of returning surplus cash to its stockholders as it repurchased shares worth $551 million and distributed $306 million as dividends.
Outlook
Management now projects total sales growth of approximately 5% and expects comps to increase about 3.5% during fiscal 2017. Lowe’s envisions operating margin to increase approximately 120 basis points in the fiscal year.
The company now anticipates fiscal 2017 earnings to be approximately $4.64 per share, up significantly from $3.99 posted in fiscal 2016 and also from the Zacks Consensus Estimate of $4.52, which could witness an upward revision in the coming days.
Moreover, the company intends to open 35 home improvement and hardware stores during fiscal 2017. As of Feb 3, 2017, the company operated 2,129 stores in the U.S., Canada and Mexico.
Lowe's Companies, Inc. Price, Consensus and EPS Surprise
Zumiez delivered an average positive earnings surprise of 30.9% over the trailing four quarters and has a long-term earnings growth rate of 15%.
Ross Stores delivered an average positive earnings surprise of 5% over the trailing four quarters and has a long-term earnings growth rate of 10.5%.
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Lowe's (LOW) Q4 Earnings Top, Stock Up on Promising View
After two straight quarters of earnings miss, Lowe’s Companies Inc. (LOW - Free Report) posted positive earnings surprise of 8.9% in the fourth quarter of fiscal 2016. Net sales also outperformed the Zacks Consensus Estimate, after missing the same in the preceding two quarters. The better-than-expected results prompted management to provide an encouraging outlook for fiscal 2017.
Consequently, shares of this North Carolina based company jumped 5.7% during pre-market trading hours.
In the recent past, Lowe’s shares have been hit hard due to lower-than-expected results in the second and third quarters. The stock has underperformed the Zacks categorized Building Product-Retail/Wholesale industry in the last six months. In the said time frame, the stock has declined 3.3%, while the overall industry advanced 5.2%. We believe that the company’s outstanding performance in the final quarter is likely to reverse this trend.
The home improvement retailer posted adjusted earnings of 86 cents a share that surpassed the Zacks Consensus Estimate of 79 cents, and surged 45.8% from 59 cents delivered in the year-ago quarter.
Net sales of $15,784 million came ahead of the Zacks Consensus Estimate of $15,280 million, and increased 19.2% year over year. The company’s sales increased can be attributed to its efforts to provide a better omni-channel customer experience and an improvement in the housing market. Comparable sales (comps) climbed 5.1% basis during the quarter, while comps for the U.S. business also increased by an equivalent rate.
Gross profit soared 18.4% year over year to $5,432 million, however, gross profit margin contracted roughly 25 basis points to 34.4%.
Other Financial Aspects
Lowe’s, which competes with The Home Depot, Inc. (HD - Free Report) , ended the quarter with cash and cash equivalents of $558 million, long-term debt (excluding current maturities) of $14,394 million and shareholders’ equity of $6,434 million.
During the quarter, the company kept its promise of returning surplus cash to its stockholders as it repurchased shares worth $551 million and distributed $306 million as dividends.
Outlook
Management now projects total sales growth of approximately 5% and expects comps to increase about 3.5% during fiscal 2017. Lowe’s envisions operating margin to increase approximately 120 basis points in the fiscal year.
The company now anticipates fiscal 2017 earnings to be approximately $4.64 per share, up significantly from $3.99 posted in fiscal 2016 and also from the Zacks Consensus Estimate of $4.52, which could witness an upward revision in the coming days.
Moreover, the company intends to open 35 home improvement and hardware stores during fiscal 2017. As of Feb 3, 2017, the company operated 2,129 stores in the U.S., Canada and Mexico.
Lowe's Companies, Inc. Price, Consensus and EPS Surprise
Lowe's Companies, Inc. Price, Consensus and EPS Surprise | Lowe's Companies, Inc. Quote
Zacks Rank & Stocks to Consider
Lowe’s currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the retail sector include Zumiez, Inc. (ZUMZ - Free Report) and Ross Stores, Inc. (ROST - Free Report) all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zumiez delivered an average positive earnings surprise of 30.9% over the trailing four quarters and has a long-term earnings growth rate of 15%.
Ross Stores delivered an average positive earnings surprise of 5% over the trailing four quarters and has a long-term earnings growth rate of 10.5%.
Everything You Need to Know About Snapchat BEFORE It Goes Public
You may be curious about the buzz surrounding Snap Inc.'s IPO on March 2. With the company expected to be valued around $22 billion, it is expected to be the largest IPO since 2014. But should you snap up this tech stock on Day 1?
In the 2017 IPO Watch List, you'll get an inside look at Snap's exciting prospects and potential challenges. You'll also learn about 4 other exciting tech companies with jaw-dropping growth. Each could go public in the coming months.
Imagine being in the first wave of investors to jump on a company with almost unlimited growth potential? This Special Report gives you the latest scoop. Download this IPO Watch List today for free >>