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Here's What You Must Note Ahead of Lowe's (LOW) Q4 Earnings

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Lowe's Companies, Inc. LOW is scheduled to report fourth-quarter fiscal 2019 numbers on Feb 26, before the opening bell. Notably, the company has a trailing four-quarter positive earnings surprise of 0.9%, on average. If all goes well, the quarter will mark the third straight quarter of an earnings beat for the company.

The Zacks Consensus Estimate for fourth-quarter earnings is pegged at 91 cents, suggesting growth of 13.8% from 80 cents earned in the year-ago quarter. We note that the consensus mark remained unchanged in the past 30 days. For revenues, the consensus estimate is pegged at $16,190 million, indicating a rise of 3.5% from the year-ago quarter’s reported tally.

Lowe's Companies, Inc. Price and EPS Surprise

 

Lowe's Companies, Inc. Price and EPS Surprise

Lowe's Companies, Inc. price-eps-surprise | Lowe's Companies, Inc. Quote

Key Factors to Note

Gains from the pro business, home improvement solutions and strong digital foothold are likely to show on Lowe's fourth-quarter results. In a bid to keep driving sales from pro customers, the company has been boosting Pro-focused brands. Lowe’s has also revamped its pro-service business website, LowesForPros.com, to focus on the needs of pro customers. Moreover, management is focused on improving Canadian operations through inventory rationalization.

Additionally, sales-growth initiatives like better product presentation, improved in-store experience, rationalizing merchandising assortments and labor scheduling are likely to have boosted the company’s sales and comparable sales (comps) in the to-be-reported quarter. The Zacks Consensus Estimate for Lowe's comparable sales at the U.S. home improvement business calls for an increase of 3%.

However, the company has been witnessing an increase in supply-chain costs. Further, any deleverage in customer delivery expenses as well as any adverse product mix shift may show on margins in the final quarter. Also, headwinds related to foreign currency fluctuations and stiff competition persist.

What Our Zacks Model Says

Our proven model does not predict 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Although Lowe’s carries a Zacks Rank #2, its Earnings ESP of 0.00% makes surprise prediction difficult.

Stocks With a Favorable Combination

Here are a few companies you may want to consider, as our model shows that these have the right combination to post an earnings beat:

G-III Apparel Group (GIII - Free Report) has an Earnings ESP of +5.62% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Costco (COST - Free Report) has an Earnings ESP of +0.56% and a Zacks Rank #2.

Burlington Stores (BURL - Free Report) has an Earnings ESP of +0.20% and a Zacks Rank #2.

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