Lowe’s Earnings to Rise in Q2, Revenue Could Disappoint

Home improvement retailer Lowe’s is forecast to report earnings per share of $3.97, which represents an increase of about 6% over the previous year, up from $3.75 per share.

However, the company that distributes building materials and supplies through stores in the United States would see a revenue decline of about 2% to $26.87 billion. During the full year, Zacks Research estimates the company will earn $10.82 per share and generate $91.63 billion in revenue, which would be up +22.12% and +2.26%, respectively, from the prior year.

Lowe’s shares have gained over 20% so far this year. The stock closed 0.48% lower at $192.69 on Friday.

Analyst Comments

“Shares of Lowe’s have risen and outpaced the industry in the past six months. The company remains well-positioned to capitalize the demand in the home improvement market backed by investments in technology, merchandise category and strength in Pro business. Notably, Lowe’s posted sturdy first quarter fiscal 2021 results, wherein the top and bottom lines beat the Zacks Consensus Estimate and grew year-over-year,” noted analysts at ZACKS Research.

“Results benefited from the strong execution of strategies to meet the broad-based demand. Also, its new total home strategy that includes providing complete solutions for various types of home repair and improvement needs bodes well. The strategy is an extension of the company’s retail-fundamentals approach. Going forward, management is committed toward expanding market share and boosting operating margin expansion.”

Lowe’s Stock Price Forecast

Eighteen analysts who offered stock ratings for Lowe’s in the last three months forecast the average price in 12 months of $230.47 with a high forecast of $250.00 and a low forecast of $205.00.

The average price target represents a 19.61% change from the last price of $192.69. From those 18 analysts, 14 rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $230 with a high of $293 under a bull scenario and $125 under the worst-case scenario. The firm gave an “Overweight” rating on home improvement retailer’s stock.

“We view Lowe’s (LOW) favourably given its longer-term transformation opportunity and structural industry tailwinds, with substantial near-term uplifts from COVID-19 spending shifts that likely translate to longer-term sales retention,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“Assuming a healthy underlying housing backdrop, we think comps can accelerate longer-term from stronger sales/sq ft trends, driven by e-comm accelerating, better in-stocks, product refreshes/exclusive launches, greater traction with Pro initiatives, and removing friction from the customer shopping experience.”

Several other analysts have also updated their stock outlook. In May, CFRA raised the target price to $220. Credit Suisse lifted the price objective to $205 from $188. JPMorgan lowered the stock price forecast to $214 from $219.

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