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Lowe's (LOW) to Post Q4 Earnings: What Awaits the Stock?

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Lowe's Companies, Inc. (LOW - Free Report) is likely to register top- and bottom-line growth when it reports fourth-quarter fiscal 2020 numbers on Feb 24. The Zacks Consensus Estimate for revenues is pegged at $19,471 million, which indicates an increase of 21.5% from the year-ago quarter’s reported figure.

The Zacks Consensus Estimate for quarterly earnings went up by 3 cents in the past 30 days and is currently pegged at $1.20 per share. The consensus estimate suggests a rise of 27.7% from earnings of 94 cents reported in the year-ago quarter. The company delivered an earnings surprise of 0.5% in the last reported quarter. Notably, this well-known home improvement retailer has a trailing four-quarter earnings surprise of 16.2%, on average.

Per the last earnings call, the company guided total sales and comparable sales growth in the range of 15-20% for the fourth quarter. The company projected the bottom line in the range of $1.10-$1.20.

Key Aspects to Note

Lowe's top line during the fourth quarter is likely to have gained from favorable demand conditions triggered by increased home remodeling and maintenance activities. With higher stay-at-home practices amid the coronavirus pandemic, home renovation and refurbishing projects are being widely undertaken. Such trends are likely to have favored the company’s U.S. home-improvement business segment in the final quarter. Also, higher demand from DIY (do-it-yourself) and pro customers across channels is likely to have remained an upside.

Additionally, we expect the company’s fourth-quarter performance to have benefited from solid omni-channel offerings. In fact, investments in the digital realm have been helping the company meet increased demand from DIY and pro customers. The company has been able to enhance customers’ online shopping experience by improving services such as online delivery scheduling as well as boosting online availability of assortments. Moreover, to enhance delivery capabilities, the company is on track with installing Buy Online Pickup in Store self-service lockers across U.S. stores. Such prudent measures are likely to have boosted the company’s online sales during the quarter in review.

However, we cannot ignore the concerns surrounding rising expenses that may have put some pressure on margins. The company has been incurring higher expenses in relation to the pandemic and expansion of supply-chain infrastructure.

Lowes Companies, Inc. Price, Consensus and EPS Surprise


Lowes Companies, Inc. Price, Consensus and EPS Surprise


What the Zacks Model Unveils

Our proven model predicts an earnings beat for Lowe's this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Lowe's currently carries a Zacks Rank #3 and an Earnings ESP of +5.29%.

Other Stocks Poised to Beat Estimates

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

Target Corporation (TGT - Free Report) currently has an Earnings ESP of +9.79% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Dollar Tree, Inc. (DLTR - Free Report) currently has an Earnings ESP of +1.94% and a Zacks Rank #2.

The Home Depot, Inc. (HD - Free Report) has an Earnings ESP of +3.28% and a Zacks Rank #3, at present.

5 Stocks Set to Double

Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.

Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.

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