Shares of Lowe’s (LOW - Free Report) fell 6% in morning trading on Wednesday after the company reported worse-than-expected second quarter fiscal 2017 results.
Lowe’s reported adjusted earnings of $1.57 per share, missing the Zacks Consensus Estimate of $1.62. The company also reported revenue of $19.495 billion, missing our estimate of $19.523 billion, although the company still grew 6.76% year-over-year.
Lowe’s poor earnings contrast sharply with their rival The Home Depot, Inc. (HD - Free Report) . Home Depot has been one of the few retail stocks that had a great earnings report this fiscal quarter. The company beat our earnings estimates while its comparable store sales were up about 6.3% year-over-year. In comparison, Lowe’s said their comparable sales rose only 4.5%.
In order to improve sales, Lowe’s plans to increase the number of hours their employees work in order to provide additional customer service face-to-face. “We believe this is the right strategy to more fully capitalize on strong traffic trends in what we believe is a supportive macroeconomic backdrop for home improvement,” said Robert Niblock, Lowe’s CEO.
However, because workers will need to be paid more, the company’s bottom line will take a hit. Lowe’s has lowered its guidance for the full fiscal year to $4.20 to $4.30 a share, well below our estimate of $4.62 per share.
This strategy could pay off in the long run, though. Customer service remains a large incentive for customers to choose Lowe’s over online retailers, like Amazon.com (AMZN - Free Report) , in order to get assistance on home improvements. “This is one category in retail where service really matters,” Brian Nagel, an analyst for Oppenheimer & Co., told CNBC this morning.
Lowe’s remains a Zacks Rank #3 (Hold), with a VGM score of ‘A.’
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Shares of Lowe’s (LOW - Free Report) fell 6% in morning trading on Wednesday after the company reported worse-than-expected second quarter fiscal 2017 results.
Lowe’s reported adjusted earnings of $1.57 per share, missing the Zacks Consensus Estimate of $1.62. The company also reported revenue of $19.495 billion, missing our estimate of $19.523 billion, although the company still grew 6.76% year-over-year.
Lowe’s poor earnings contrast sharply with their rival The Home Depot, Inc. (HD - Free Report) . Home Depot has been one of the few retail stocks that had a great earnings report this fiscal quarter. The company beat our earnings estimates while its comparable store sales were up about 6.3% year-over-year. In comparison, Lowe’s said their comparable sales rose only 4.5%.
In order to improve sales, Lowe’s plans to increase the number of hours their employees work in order to provide additional customer service face-to-face. “We believe this is the right strategy to more fully capitalize on strong traffic trends in what we believe is a supportive macroeconomic backdrop for home improvement,” said Robert Niblock, Lowe’s CEO.
However, because workers will need to be paid more, the company’s bottom line will take a hit. Lowe’s has lowered its guidance for the full fiscal year to $4.20 to $4.30 a share, well below our estimate of $4.62 per share.
This strategy could pay off in the long run, though. Customer service remains a large incentive for customers to choose Lowe’s over online retailers, like Amazon.com (AMZN - Free Report) , in order to get assistance on home improvements. “This is one category in retail where service really matters,” Brian Nagel, an analyst for Oppenheimer & Co., told CNBC this morning.
Lowe’s remains a Zacks Rank #3 (Hold), with a VGM score of ‘A.’
4 Surprising Tech Stocks to Keep an Eye on
Tech stocks have been a major force behind the market’s record highs, but picking the best ones to buy can be tough. There’s a simple way to invest in the success of the entire sector. Zacks has just released a Special Report revealing one thing tech companies literally cannot function without. More importantly, it reveals 4 top stocks set to skyrocket on increasing demand for these devices. I encourage you to get the report now – before the next wave of innovations really take off.
See Stocks Now>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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