Lowe's stock edges higher on earnings beat, 'better-than-feared' outlook

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By Senad Karaahmetovic

Shares of Lowe’s (NYSE:LOW) are trading up over 2% in pre-open Wednesday trading after the retailer reported better-than-expected results for its third quarter.

Lowe’s reported a Q3 EPS of $3.27 per share on sales of $23.5 billion, beating the consensus of $3.08 on revenue of $23.12 billion. Comparable sales rose by 2.2%, led by a 3% surge in U.S. home improvement comparable sales.

On the guidance front, Lowe’s sees full-year EPS between $13.65 and $13.80, ahead of the $13.54 estimate. Full-year revenues are seen at $97.50 billion (the midpoint), beating the $96.97 billion consensus.

The forecast is raised to reflect “stronger-than-expected operating results,” Lowe’s said. It added that it managed to drive “substantial improvement in adjusted operating margin through disciplined execution and cost management.”

Goldman Sachs analysts said the LOW stock reaction was justified after beat-and-raise quarter.

“We note the stock was up +2% yesterday post the positive HD print,” McShane said in a flash note.

Telsey Advisory Group analysts said the guidance is “better than feared.”

“Lowe's remains focused on increasing its market share and improving sales productivity and operating efficiency. The company should continue to benefit from its Total Home strategy—1) focus on the Pro; 2) enhance digital; 3) improve installation services; 4) drive localization; and 5) elevate its assortment—and a still decent home improvement backdrop,” the analysts said in a client note.