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Lowe's (LOW) Q4 Earnings: Will Comps Continue to Improve?
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Lowe's Companies, Inc. (LOW - Free Report) is scheduled to report fourth-quarter fiscal 2017 results on Feb 28. In the preceding quarter, the company’s earnings surpassed the Zacks Consensus Estimate by a margin of 2.9%. This home improvement retailer also outperformed the consensus mark in the trailing four quarters by an average of 1.2%.
Which Way are Estimates Treading?
Let’s look at earnings estimate revisions in order to get a clear picture of what analysts are thinking about the company prior to the release. Notably, the Zacks Consensus Estimate has been stable in the last 30 days. For the quarter under review, the consensus mark is pegged at 88 cents. This reflects an improvement of 2.3% from 86 cents in the year-ago quarter. Analysts polled by Zacks expect revenues of $15,288 million, down 3.1% year over year.
Factors at Play
An improving job scenario, housing market recovery, merchandising initiatives and post hurricane construction activities along with efforts to enhance omni-channel capabilities bode well for Lowe’s. Moreover, the company’s focus on strengthening its relationship with pro customers and solid performance of Canadian business is encouraging. It also remains well-positioned to reap the benefits of strategic acquisitions done earlier such as that of RONA.
In fact, the reflection of these endeavors is quite evident from a 5.7% rise in third-quarter comparable sales (comps), following an increase of 4.5% and 1.9% in the second and first quarter, respectively. Management had earlier projected total sales growth of approximately 5% with comps increase of about 3.5% for fiscal 2017.
Undoubtedly, the above discussion makes us optimistic about Lowe’s performance in the soon-to-be reported quarter. However, threats emerging from cannibalization and stiff competition cannot be ignored. Also, we observed that the company’s margin have been under pressure for quite some time now. Evidently, Lowe's gross margin had contracted a respective 25, 40, 10 and 43 basis points in the fourth, third, second and first quarters of fiscal 2016. The same also declined 64, 23 and 28 basis points to 34.4%, 34.2% and 34.1%, respectively, in the first, second and third quarters of fiscal 2017. Analysts believe that Lowe’s focus on consumer messaging and investment in incremental customer-facing hours in its stores is likely to weigh on margins.
Lowe's Companies, Inc. Price, Consensus and EPS Surprise
Our proven model shows that Lowe's is likely to beat estimates this quarter. This is because the stock has the right combination of two ingredients — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Lowe's has an Earnings ESP of +1.03% and a Zacks Rank #2. This makes us reasonably confident that the bottom line is likely to outperform estimates.
Other Stocks With Favorable Combination
Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Burlington Stores, Inc. (BURL - Free Report) has an Earnings ESP of +0.06% and a Zacks Rank #2.
Macy's, Inc. (M - Free Report) has an Earnings ESP of +0.92% and a Zacks Rank #2.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Lowe's (LOW) Q4 Earnings: Will Comps Continue to Improve?
Lowe's Companies, Inc. (LOW - Free Report) is scheduled to report fourth-quarter fiscal 2017 results on Feb 28. In the preceding quarter, the company’s earnings surpassed the Zacks Consensus Estimate by a margin of 2.9%. This home improvement retailer also outperformed the consensus mark in the trailing four quarters by an average of 1.2%.
Which Way are Estimates Treading?
Let’s look at earnings estimate revisions in order to get a clear picture of what analysts are thinking about the company prior to the release. Notably, the Zacks Consensus Estimate has been stable in the last 30 days. For the quarter under review, the consensus mark is pegged at 88 cents. This reflects an improvement of 2.3% from 86 cents in the year-ago quarter. Analysts polled by Zacks expect revenues of $15,288 million, down 3.1% year over year.
Factors at Play
An improving job scenario, housing market recovery, merchandising initiatives and post hurricane construction activities along with efforts to enhance omni-channel capabilities bode well for Lowe’s. Moreover, the company’s focus on strengthening its relationship with pro customers and solid performance of Canadian business is encouraging. It also remains well-positioned to reap the benefits of strategic acquisitions done earlier such as that of RONA.
In fact, the reflection of these endeavors is quite evident from a 5.7% rise in third-quarter comparable sales (comps), following an increase of 4.5% and 1.9% in the second and first quarter, respectively. Management had earlier projected total sales growth of approximately 5% with comps increase of about 3.5% for fiscal 2017.
Undoubtedly, the above discussion makes us optimistic about Lowe’s performance in the soon-to-be reported quarter. However, threats emerging from cannibalization and stiff competition cannot be ignored. Also, we observed that the company’s margin have been under pressure for quite some time now. Evidently, Lowe's gross margin had contracted a respective 25, 40, 10 and 43 basis points in the fourth, third, second and first quarters of fiscal 2016. The same also declined 64, 23 and 28 basis points to 34.4%, 34.2% and 34.1%, respectively, in the first, second and third quarters of fiscal 2017. Analysts believe that Lowe’s focus on consumer messaging and investment in incremental customer-facing hours in its stores is likely to weigh on margins.
Lowe's Companies, Inc. Price, Consensus and EPS Surprise
Lowe's Companies, Inc. Price, Consensus and EPS Surprise | Lowe's Companies, Inc. Quote
What the Zacks Model Unveils
Our proven model shows that Lowe's is likely to beat estimates this quarter. This is because the stock has the right combination of two ingredients — a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Earnings ESP — for a likely positive surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Lowe's has an Earnings ESP of +1.03% and a Zacks Rank #2. This makes us reasonably confident that the bottom line is likely to outperform estimates.
Other Stocks With Favorable Combination
Here are three companies you may want to consider as our model shows that these have the right combination of elements to post an earnings beat:
Dillard's, Inc. (DDS - Free Report) has an Earnings ESP of +15.83% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Burlington Stores, Inc. (BURL - Free Report) has an Earnings ESP of +0.06% and a Zacks Rank #2.
Macy's, Inc. (M - Free Report) has an Earnings ESP of +0.92% and a Zacks Rank #2.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>