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Lowe's (LOW) Q2 Earnings Beat Estimates, Sales Fall Y/Y
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Lowe’s Companies, Inc. (LOW - Free Report) posted better-than-expected results in second-quarter fiscal 2023, with the top and bottom lines beating the Zacks Consensus Estimate. However, both sales and earnings fell from the previous fiscal year’s quarterly readings.
This presently Zacks Rank #3 (Hold) player’s shares have gained 5.2% in the past three months compared with the industry’s 7% rise.
Image Source: Zacks Investment Research
Quarter in Detail
Adjusted earnings per share (EPS) of $4.56 surpassed the Zacks Consensus Estimate of $4.49 but dipped 2.4% from the second-quarter fiscal 2022 tally.
Net sales of $24,956 million decreased 9.2% year over year but came ahead of the consensus estimate of $24,936 million. Comparable sales (comps) fell 1.6% in the quarter under review, with sturdy spring recovery as well as Pro and online sales growth, somewhat offset by lumber deflation and lower DIY discretionary demand.
Gross profit slipped 8% year over year to $8,399 million, while the gross margin increased 42 basis points (bps) to 33.66%. Operating income amounted to $3,886 million, down 8.1% year over year. However, the operating margin expanded 18 bps from the year-earlier quarter to 15.57%.
Lowe's Companies, Inc. Price, Consensus and EPS Surprise
LOW ended the quarter with cash and cash equivalents of $3,494 million, long-term debt (excluding current maturities) of $35,839 million and shareholders’ deficit of $14,732 million.
Lowe’s generated cash flow from operations of $5,968 million for the first six months of fiscal 2023. Capital expenditures amounted to $765 million for the aforementioned period. For fiscal 2023, LOW expects a capex of up to $2 billion.
In the reported quarter, Lowe’s bought back 10.1 million shares for $2.2 billion and paid out dividends of $624 million.
As of Aug 4, 2023, Lowe’s operated more than 1,700 home-improvement stores across the United States.
Outlook
For fiscal 2023, LOW still expects revenues to be $87-$89 billion versus $97.1 billion delivered in fiscal 2022.
Comps in fiscal 2023 are envisioned to be in the range of -2% to -4% from the year-ago period. The adjusted operating margin is expected to be 13.4-13.6%. Management anticipates EPS of $13.20-$13.60 for the fiscal year versus earnings of $13.89 per share in fiscal 2022. It envisions adjusted effective tax rate to be about 25%.
Solid Picks in Retail
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch (ANF - Free Report) , Boot Barn (BOOT - Free Report) and American Eagle Outfitters (AEO - Free Report) .
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and EPS suggests growth of 3.4% and 736%, respectively, from the year-ago reported figures. ANF has delivered an earnings surprise of 480.6% in the last four quarters.
Boot Barn, a fashion retailer of apparel and accessories, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 13.5%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales suggests growth of 5.1% from the year-ago reported figure.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank #2 (Buy). AEO has delivered an average earnings surprise of 9.2% in the last four quarters.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year EPS suggests growth of 7.2% from the year-ago reported figure.
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Lowe's (LOW) Q2 Earnings Beat Estimates, Sales Fall Y/Y
Lowe’s Companies, Inc. (LOW - Free Report) posted better-than-expected results in second-quarter fiscal 2023, with the top and bottom lines beating the Zacks Consensus Estimate. However, both sales and earnings fell from the previous fiscal year’s quarterly readings.
This presently Zacks Rank #3 (Hold) player’s shares have gained 5.2% in the past three months compared with the industry’s 7% rise.
Image Source: Zacks Investment Research
Quarter in Detail
Adjusted earnings per share (EPS) of $4.56 surpassed the Zacks Consensus Estimate of $4.49 but dipped 2.4% from the second-quarter fiscal 2022 tally.
Net sales of $24,956 million decreased 9.2% year over year but came ahead of the consensus estimate of $24,936 million. Comparable sales (comps) fell 1.6% in the quarter under review, with sturdy spring recovery as well as Pro and online sales growth, somewhat offset by lumber deflation and lower DIY discretionary demand.
Gross profit slipped 8% year over year to $8,399 million, while the gross margin increased 42 basis points (bps) to 33.66%. Operating income amounted to $3,886 million, down 8.1% year over year. However, the operating margin expanded 18 bps from the year-earlier quarter to 15.57%.
Lowe's Companies, Inc. Price, Consensus and EPS Surprise
Lowe's Companies, Inc. price-consensus-eps-surprise-chart | Lowe's Companies, Inc. Quote
Other Financial Aspects & Developments
LOW ended the quarter with cash and cash equivalents of $3,494 million, long-term debt (excluding current maturities) of $35,839 million and shareholders’ deficit of $14,732 million.
Lowe’s generated cash flow from operations of $5,968 million for the first six months of fiscal 2023. Capital expenditures amounted to $765 million for the aforementioned period. For fiscal 2023, LOW expects a capex of up to $2 billion.
In the reported quarter, Lowe’s bought back 10.1 million shares for $2.2 billion and paid out dividends of $624 million.
As of Aug 4, 2023, Lowe’s operated more than 1,700 home-improvement stores across the United States.
Outlook
For fiscal 2023, LOW still expects revenues to be $87-$89 billion versus $97.1 billion delivered in fiscal 2022.
Comps in fiscal 2023 are envisioned to be in the range of -2% to -4% from the year-ago period. The adjusted operating margin is expected to be 13.4-13.6%. Management anticipates EPS of $13.20-$13.60 for the fiscal year versus earnings of $13.89 per share in fiscal 2022. It envisions adjusted effective tax rate to be about 25%.
Solid Picks in Retail
We have highlighted three better-ranked stocks, namely Abercrombie & Fitch (ANF - Free Report) , Boot Barn (BOOT - Free Report) and American Eagle Outfitters (AEO - Free Report) .
Abercrombie & Fitch, a leading casual apparel retailer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and EPS suggests growth of 3.4% and 736%, respectively, from the year-ago reported figures. ANF has delivered an earnings surprise of 480.6% in the last four quarters.
Boot Barn, a fashion retailer of apparel and accessories, currently sports a Zacks Rank of 1. The company has a trailing four-quarter earnings surprise of 13.5%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales suggests growth of 5.1% from the year-ago reported figure.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently carries a Zacks Rank #2 (Buy). AEO has delivered an average earnings surprise of 9.2% in the last four quarters.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year EPS suggests growth of 7.2% from the year-ago reported figure.