Company Update (NYSE:LOW): Lowe’s Companies, Inc. Reports First Quarter Sales And Earnings Results

Lowe’s Companies, Inc. (NYSE:LOW) reported net earnings of $884 million for the quarter ended April 29, 2016, a 31.4 percent increase over the same period a year ago. Diluted earnings per share increased 40.0 percent to $0.98 from $0.70 in the first quarter of 2015.

The first quarter results include an unrealized gain on a foreign currency hedge entered into in advance of the Company’s pending RONA acquisition, which increased pre-tax earnings for the first quarter by $160 million and diluted earnings per share by $0.11.

Sales for the first quarter increased 7.8 percent to $15.2 billion from $14.1 billion in the first quarter of 2015, and comparable sales for the quarter increased 7.3 percent.  Comparable sales for the U.S. home improvement business increased 7.5 percent.

“We executed well in the quarter, growing both transaction and average ticket to achieve comparable sales growth that exceeded our expectations,” commented Robert A. Niblock, Lowe’s chairman, president and CEO. “We continued to focus on providing better omni-channel customer experiences, and saw strength in indoor as well as outdoor categories.

“Our team’s project expertise and commitment to customer service allowed us to capitalize on strong home improvement demand during the quarter, and I would like to thank them for their efforts,” Niblock added.

Delivering on its commitment to return excess cash to shareholders, the Company repurchased $1.2 billionof stock under its share repurchase program and paid $255 million in dividends in the first quarter.

As of April 29, 2016, Lowe’s operated 1,860 home improvement and hardware stores in the United States,Canada and Mexico representing 202.3 million square feet of retail selling space.

Lowe’s Business Outlook1

Fiscal Year 2016 — a 53-week Year (comparisons to fiscal year 2015 — a 52-week year; based on U.S. GAAP unless otherwise noted)

  • Total sales are expected to increase approximately 6 percent, including the 53rd week
  • The 53rd week is expected to increase total sales by approximately 1.5 percent
  • Comparable sales are expected to increase approximately 4 percent
  • The company expects to add approximately 45 home improvement and hardware stores.
  • Earnings before interest and taxes as a percentage of sales (operating margin) are expected to increase 80 to 90 basis points.2
  • The effective income tax rate is expected to be approximately 38.1%.
  • Diluted earnings per share of approximately $4.11 are expected for the fiscal year ending February 3, 2017.

1 Lowe’s Business Outlook excludes the impact of the pending RONA acquisition.

2 Operating margin growth excludes the unrealized gain on the foreign currency hedge entered into in advance of the Company’s pending RONA acquisition as well as the impact of the non-cash impairment charge the Company recognized in the fourth quarter of 2015 in connection with its decision to exit its joint venture with Woolworths Limited in Australia. (Original Source)

Shares of Lowe’s Companies closed yesterday at $76.05, down $0.95 -1.23%. LOW has a 1-year high of $78.13 and a 1-year low of $62.62. The stock’s 50-day moving average is $75.91 and its 200-day moving average is $72.93.

On the ratings front, Lowe’s Companies has been the subject of a number of recent research reports. In a report issued on May 16, Robert W. Baird analyst Peter Benedict reiterated a Buy rating on LOW. Separately, on the same day, Oppenheimer’s Brian Nagel reiterated a Buy rating on the stock and has a price target of $85.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Peter Benedict and Brian Nagel have a total average return of 8.4% and 5.4% respectively. Benedict has a success rate of 66.7% and is ranked #707 out of 3833 analysts, while Nagel has a success rate of 56.1% and is ranked #177.

The street is mostly Bullish on LOW stock. Out of 6 analysts who cover the stock, 5 suggest a Buy rating and one recommends to Hold the stock. The 12-month average price target assigned to the stock is $85.50, which represents a potential upside of 12.4% from where the stock is currently trading.

Lowe’s Cos., Inc. is engaged in the retail sale of home improvement products. The company offers products for maintenance, repair, remodeling, home decorating and property maintenance. It also offers home improvement products in the following categories: appliances, bathroom, building supply, electrical, flooring, hardware, paint, kitchen, plumbing, lighting & fans, outdoor living, windows and doors. The company was founded in 1946 and is headquartered in Mooresville, NC.

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