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Lowe's (LOW) Q2 Earnings: Can the Stock Pull a Surprise?

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Lowe's Companies, Inc. (LOW - Free Report) is set to release second-quarter fiscal 2017 results on Aug 23. Investor focus will remain on whether this home improvement retailer manages to deliver a positive earnings surprise in the to-be-reported quarter. In the trailing four quarters, the company underperformed the Zacks Consensus Estimate by an average of 1.7%. Let’s see how things are shaping up prior to this announcement.

What to Expect?

The current Zacks Consensus Estimate for second-quarter fiscal 2017 is $1.62, up about 18% from the year-ago period. We noted that the Zacks Consensus Estimate has been stable in the past 30 days. Analysts polled by Zacks anticipate revenues of $19,524 million, reflecting an increase of nearly 7% from the prior-year quarter.

Factors at Play

An improving job picture, gradual recovery in the housing market and merchandising initiatives along with efforts to provide better omni-channel customer experience bode well for Lowe’s. It also remains well positioned to reap the benefits of strategic acquisitions done earlier, such as that of RONA. In an effort to strengthen relationship with pro customers, Lowe's has concluded the acquisition of Maintenance Supply Headquarters, the distributor of maintenance, repair and operations products. However, cannibalization and stiff competition still remain threats.

Lowe's Companies, Inc. Price, Consensus and EPS Surprise

 

Lowe's Companies, Inc. Price, Consensus and EPS Surprise | Lowe's Companies, Inc. Quote

What Does the Zacks Model Unveil?

Our proven model shows that Lowe's is likely to beat earnings estimates this quarter. A stock needs to have both a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP for this to happen. Lowe's Earnings ESP of +0.23% and a Zacks Rank #3 make us reasonably confident of an earnings beat. You may uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Other Stocks with Favorable Combination

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

Burlington Stores, Inc. (BURL - Free Report) has an Earnings ESP of +3.23% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Big Lots, Inc. (BIG - Free Report) has an Earnings ESP of +0.72% and a Zacks Rank #2.

GameStop Corp. (GME - Free Report) has an Earnings ESP of +0.31% and a Zacks Rank #3.

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