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Lowe's (LOW) Issues FY22 View, Approves New Share Buyback Plan

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Lowe's Companies, Inc. (LOW - Free Report) recently shared updates on fiscal 2021 and fiscal 2022 as well as announced a new share repurchase authorization. Management highlighted that LOW is focused on its Total Home Strategy, which targets productivity boost and enrichment of the integrated omni-channel shopping experience. These growth factors are likely to drive market share gains across both Lowe’s DIY and Pro categories.

Lowe’s shares have inched up nearly 2% during the trading hours on Dec 15. This currently Zacks Rank #1 (Strong Buy) stock has surged 36.7% in the past three months compared with the industry’s 12.1% rally. You can see the complete list of today’s Zacks #1 Rank stocks here.

Let’s delve deeper.

Outlook

For fiscal 2021, Lowe’s continues to project total sales of about $95 billion, implying growth of 6% from the last fiscal year’s reported figure. Also, comparable sales are forecast to grow nearly 33% on a two-year basis. The Zacks Consensus Estimate for fiscal 2021 sales is currently pegged at $95.7 billion.

The gross margin rate remains 33.10%, representing slight growth year over year. Operating margin is still anticipated to be 12.4% while ROIC of more than 33% is expected for fiscal 2021.

During the third quarter of fiscal 2021, Lowe’s bought back 13.7 million shares worth $2.9 billion and paid out dividends of $563 million. Management had earlier anticipated repurchasing shares worth $3 billion in the fiscal fourth quarter, indicating a total buyback of $12 billion for the current fiscal year.

For fiscal 2022, management estimates total sales between $94 billion and $97 billion, including the 53rd week. The said week is likely to raise sales nearly $1-$1.5 billion. Comparable sales are predicted in the range of a 3% decline to flat from the last fiscal year’s reported number. This might be due to sluggish home-improvement demand. The Zacks Consensus Estimate for fiscal 2022 sales is currently pegged at $97 billion.

For fiscal 2022, the gross margin rate is likely to remain flat from the year-ago reported number while the operating margin is expected in the band of 12.5-12.8%. Further, management projects an interest expense of $1-$1.1 billion and an effective income tax rate of around 25% for the said fiscal. As a result, earnings per share are envisioned in the band of $12.25-$13 for fiscal 2022. The consensus mark for fiscal 2022 earnings stands at $12.82. Management expects repurchase of shares worth $12 billion. Lowe’s anticipates ROIC of roughly 35% for the fiscal and capital expenditures of approximately $2 billion.

What Else?

Lowe’s remains committed to maximizing shareholder value through a discreet and efficient capital-allocation strategy. Given LOW’s cash flow generation capabilities and growth strategies, the company’s board authorized a new $13-billion share repurchase program.

The new buyback plan has no expiration date and further adds to the earlier program's balance, having $7.3 billion as of Dec 14, 2021. This brings Lowe’s current total share repurchase authorization of around $20 billion.

3 Picks You Can’t Miss out

Some other top-ranked stocks are Boot Barn Holdings (BOOT - Free Report) , Tractor Supply Company (TSCO - Free Report) and Target (TGT - Free Report) .

Boot Barn Holdings, a lifestyle retailer of western and work-related footwear, apparel and accessories, sports a Zacks Rank of 1 at present. The stock has jumped 187% in the year-to-date period.

The Zacks Consensus Estimate for Boot Barn Holdings’ current financial-year sales and earnings per share (EPS) suggests growth of 54.6% and 188%, respectively, from the year-ago period’s corresponding figures. BOOT has a trailing four-quarter earnings surprise of 35.3%, on average.

Tractor Supply Company, a rural lifestyle retailer in the United States, flaunts a Zacks Rank of 1, currently. TSCO has a trailing four-quarter earnings surprise of 22.8%, on average. Shares of TSCO have surged 59.6% year to date.

The Zacks Consensus Estimate for Tractor Supply Company’s current-year sales and EPS suggests growth of 19% and 23.9%, respectively, from the year-ago period’s corresponding readings. TSCO has an expected EPS growth rate of 10.2% for three-five years.

Target, a renowned omni-channel retailer, presently carries a Zacks Rank #2 (Buy). TGT has a trailing four-quarter earnings surprise of 19.7%, on average. The stock has rallied 36.1% in the year-to-date period.

The Zacks Consensus Estimate for Target’s current-year sales and EPS suggests growth of 13.9% and 40.1%, respectively, from the corresponding year-ago period’s levels. TGT has an expected EPS growth rate of 14.4% for three-five years.