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Improved merchandise and increased demand on account of remodeling activities following Hurricane Sandy, led Lowe’s Companies Inc. (LOW - Analyst Report) to post fourth-quarter 2012 earnings of 26 cents a share that handily surpassed the Zacks Consensus Estimate of 23 cents. However, earnings remained flat year over year.

Following healthy results, the company now expects earnings to be $2.05 per share in fiscal 2013. The current Zacks Consensus Estimate for fiscal 2013 is $2.08.

This Zacks Rank #2 (Buy) stock, which competes with The Home Depot, Inc. (HD - Analyst Report), witnessed a 5% decline in total revenue to $11,046 million. However, the reported revenue surpassed the Zacks Consensus Estimate of $10,826 million. During the quarter, comparable-store sales grew 1.9% on a consolidated basis, and it marked an equal increase in U.S. operations.

Going forward, the company expects total sales to rise by 4% in fiscal 2013, while comparable-store sales are expected to increase 3.5%.

Despite a 5.1% decline in cost of sales, gross profit decreased 4.9% year over year to $3,785 million. However, gross profit margin showed signs of improvement and increased marginally to 34.3% during the quarter, reflecting a decline in cost of sales as a percentage of revenues.

The company now expects earnings before interest and taxes (EBIT) as a percentage of sales or operating margin to expand by 60 basis points year over year in fiscal 2013.

Moreover, the company plans to open 10 new stores during fiscal 2013. As of Feb 1, 2013, the company operated 1,754 locations in the United States, Canada and Mexico.

Other Financial Aspects

Lowe’s ended the quarter with cash and cash equivalents of $541 million, long-term debt of $9,030 million, reflecting a debt-to-capitalization ratio of 39.5%, and shareholders’ equity of $13,857 million.

During the quarter, the company repurchased 21.3 million shares for $750 million and distributed $180 million in dividends. For fiscal 2012, the company repurchased 146 million shares for $4.35 billion and distributed $704 million through dividends.

Moreover, in order to enhance shareholders’ return, the company announced a new $5 billion share repurchase program overriding the current program.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

New York & Company Inc. (NWY - Snapshot Report) with an Earnings ESP of +12.50% and a Zacks Rank #2 (Buy).

Dollar Tree Inc. (DLTR - Analyst Report) has an Earnings ESP of +1.01% and carries a Zacks Rank #3 (Hold).

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