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Lowe's Shares up Post Q4 Earnings: What's Driving the Stock?
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Lowe's Companies, Inc. (LOW - Free Report) has exhibited an impressive run in the index since this home improvement retailer came out with its fourth-quarter fiscal 2016 results before the opening bell on Mar 1, 2017. We noted that post earnings announcement shares of this Mooresville, NC-based company has surged roughly 12%.
Notably, in the past three months, Lowe’s has not only outperformed the Zacks categorized Building Product-Retail/Wholesale industry but also the broader sector. In the said period, the stock has increased 14.2%, while the industry gained 10.4%. Meanwhile the broader Retail-Wholesale sector, of which both are part of, advanced 2.9% in the same time frame.
So what’s driving the stock?
An improving job scenario, gradual recovery in the housing market and merchandising initiatives along with efforts to provide better omni-channel customer experience bode well for Lowe’s. It also remains well positioned to reap the benefits of strategic acquisitions done earlier such as that of Orchard Supply Hardware Stores, ATG Stores and RONA.
We observed that after two straight quarters of earnings miss, the company posted positive earnings surprise of 8.9% in the final quarter of fiscal 2016. Net sales also beat the Zacks Consensus Estimate, after missing the same in the preceding two quarters. (Read: Lowe's Q4 Earnings Top, Stock Up on Promising View)
The better-than-expected results prompted management to provide an encouraging outlook for fiscal 2017. Management now projects total sales growth of approximately 5% and expects comps to increase about 3.5% during fiscal 2017. The company now anticipates fiscal 2017 earnings to be approximately $4.64 per share, up significantly from $3.99 posted in fiscal 2016.
Following the sturdy results and upbeat outlook, the Zacks Consensus Estimate has been trending upwards. In the past 30 days, both the Zacks Consensus Estimate of $4.64 for fiscal 2017 and $5.23 for fiscal 2018 has increased 11 cents. Moreover, the Zacks Consensus Estimate for the first quarter of fiscal 2017 has jumped by a couple of cents to $1.05 in the same time frame.
However, analysts pointed that stiff competition from The Home Depot, Inc. (HD - Free Report) and cannibalization still remains matters of concern. Moreover, the company’s customers remain sensitive to macroeconomic factors including interest rate hikes, increase in fuel and energy costs, credit availability, unemployment levels, and high household debt levels. This may negatively impact Lowe’s discretionary spending, and in turn its growth and profitability.
Given the pros and cons embedded the stock currently carries a Zacks Rank #3 (Hold).
Burlington Stores delivered an average positive earnings surprise of 26.3% in the trailing four quarters and has a long-term earnings growth rate of 15.9%.
Kate Spade delivered an average positive earnings surprise of 14.6% in the trailing four quarters and has a long-term earnings growth rate of 28.3%.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>
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Lowe's Shares up Post Q4 Earnings: What's Driving the Stock?
Lowe's Companies, Inc. (LOW - Free Report) has exhibited an impressive run in the index since this home improvement retailer came out with its fourth-quarter fiscal 2016 results before the opening bell on Mar 1, 2017. We noted that post earnings announcement shares of this Mooresville, NC-based company has surged roughly 12%.
Notably, in the past three months, Lowe’s has not only outperformed the Zacks categorized Building Product-Retail/Wholesale industry but also the broader sector. In the said period, the stock has increased 14.2%, while the industry gained 10.4%. Meanwhile the broader Retail-Wholesale sector, of which both are part of, advanced 2.9% in the same time frame.
So what’s driving the stock?
An improving job scenario, gradual recovery in the housing market and merchandising initiatives along with efforts to provide better omni-channel customer experience bode well for Lowe’s. It also remains well positioned to reap the benefits of strategic acquisitions done earlier such as that of Orchard Supply Hardware Stores, ATG Stores and RONA.
We observed that after two straight quarters of earnings miss, the company posted positive earnings surprise of 8.9% in the final quarter of fiscal 2016. Net sales also beat the Zacks Consensus Estimate, after missing the same in the preceding two quarters. (Read: Lowe's Q4 Earnings Top, Stock Up on Promising View)
The better-than-expected results prompted management to provide an encouraging outlook for fiscal 2017. Management now projects total sales growth of approximately 5% and expects comps to increase about 3.5% during fiscal 2017. The company now anticipates fiscal 2017 earnings to be approximately $4.64 per share, up significantly from $3.99 posted in fiscal 2016.
Following the sturdy results and upbeat outlook, the Zacks Consensus Estimate has been trending upwards. In the past 30 days, both the Zacks Consensus Estimate of $4.64 for fiscal 2017 and $5.23 for fiscal 2018 has increased 11 cents. Moreover, the Zacks Consensus Estimate for the first quarter of fiscal 2017 has jumped by a couple of cents to $1.05 in the same time frame.
However, analysts pointed that stiff competition from The Home Depot, Inc. (HD - Free Report) and cannibalization still remains matters of concern. Moreover, the company’s customers remain sensitive to macroeconomic factors including interest rate hikes, increase in fuel and energy costs, credit availability, unemployment levels, and high household debt levels. This may negatively impact Lowe’s discretionary spending, and in turn its growth and profitability.
Given the pros and cons embedded the stock currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Better-ranked stocks in the retail space include Burlington Stores, Inc. (BURL - Free Report) and Kate Spade & Company both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Burlington Stores delivered an average positive earnings surprise of 26.3% in the trailing four quarters and has a long-term earnings growth rate of 15.9%.
Kate Spade delivered an average positive earnings surprise of 14.6% in the trailing four quarters and has a long-term earnings growth rate of 28.3%.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>