Lowe’s shares gain the most in 65 weeks on Wednesday as second-quarter revenue, earnings exceed estimates, same-store sales also beat

August 22, 2019 7:08 am

Lowe’s Companies Inc’s second-quarter earnings, reported on Wednesday, exceeded Wall Street estimates. The department store operator also reported a stronger-than-anticipated comparable sales growth.

Shares of Lowe’s Companies Inc closed higher for a fourth consecutive trading session in New York on Wednesday. It has also been the sharpest daily surge since May 23rd 2018. The stock went up 10.35% ($10.13) to $108.00, after touching an intraday high at $110.24, or a price level not seen since May 21st ($111.71).

Shares of Lowe’s Companies Inc have risen 16.93% so far in 2019 compared with a 16.66% gain for the benchmark index, S&P 500 (SPX).

In 2018, Lowe’s stock went down 0.62%, thus, it again outperformed the S&P 500, which registered a 6.24% loss.

Total revenue went up 0.5% year-on-year to $20.99 billion during the second quarter ended on August 2nd. In comparison, analysts on average had expected revenue of $20.94 billion.

Sales at stores, which are open for at least 13 months, grew 2.3% year-on-year during the second quarter, while exceeding the median analyst estimate of a 1.9% growth.

Same-store sales in the United States were reported to have risen 3.2% year-on-year.

Meanwhile, net income attributable to shareholders went up to $1.7 billion (or $2.14 per share) during the fiscal second quarter from $1.5 billion (or $1.86 per share) during the same period a year earlier.

Lowe’s earnings per share, which exclude special items, were reported at $2.15 during the quarter ended on August 2nd. That compares with a median analyst forecast of $2.01 per share.

“We capitalized on spring demand, strong holiday event execution and growth in Paint and our Pro business to deliver strong second quarter results. Despite lumber deflation and difficult weather, we are pleased that we delivered positive comparable sales in all 15 geographic regions of the U.S. This is a reflection of a solid macroeconomic backdrop and continued momentum executing our retail fundamentals framework,” Marvin Ellison, Lowe’s President and Chief Executive Officer, said in a statement.

Lowe’s now expects a 2% growth in its total sales during fiscal year 2019 and a 3% growth in its comparable sales.

The company also expects full-year adjusted earnings within the range of $5.45 per share to $5.65 per share.

Analyst stock price forecast and recommendation

According to CNN Money, the 28 analysts, offering 12-month forecasts regarding Lowe’s Companies Inc’s stock price, have a median target of $115.00, with a high estimate of $135.00 and a low estimate of $95.00. The median estimate represents a 6.48% upside compared to the closing price of $108.00 on August 21st.

The same media also reported that at least 18 out of 31 surveyed investment analysts had rated Lowe’s Companies Inc’s stock as “Buy”, while 10 – as “Hold”.

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