Lowe’s (LOW) Q3 earnings top expectations but sales miss; lifts FY19 outlook

Home improvement firm Lowe’s Companies, Inc. (NYSE: LOW) Wednesday reported a 36% increase in its third-quarter adjusted earnings, reflecting solid comparable-store sales. Earnings exceeded the market’s expectations, while sales missed. The company also revised up its full-year guidance. The stock gained about 5% during Wednesday’s pre-market trading session, immediately after the announcement.

Earnings, adjusted for special items, rose to $1.41 per share from $1.04 per share in the third quarter of 2018 and came in above the market’s prediction. Unadjusted profit was $1.05 billion or $1.36 per share, compared to $629 million or $0.78 per share last year.

Sales Miss

At $17.4 billion, net sales were broadly unchanged from the year-ago period but below analysts’ consensus estimate. Total comparable sales moved up 2.2% and US comparable-store sales advanced 3%.

Related: Home Depot misses Q3 revenue estimates

“Due to improved execution, we delivered strong earnings per share growth, and as a result, we are raising our adjusted earnings per share and adjusted operating income guidance for 2019. As we enter the fourth quarter, we are building strong momentum in the U.S. and are well-positioned to deliver strong topline performance, while also driving margin improvement and operational efficiency,” said Lowe’s CEO Marvin Ellison.

Outlook

Meanwhile, the management revised up its full-year 2019 adjusted earnings guidance to the range of $5.63 per share to $5.70 per share. Unadjusted earnings are forecast to be between $5.35 per share and $5.47 per share.

Currently, the top-line is expected to increase by around 2% in fiscal 2019, and comparable-store sales to rise 3%. Operating income, as a percentage of sales, is expected to grow by 290-320 basis points, up from the earlier outlook.

Updates

During the quarter, Lowe’s closed 34 underperforming stores in Canada. It also repurchased $835 million of its common shares and paid $428 million in dividends.

Also see: Lowe’s Q2 2019 Earnings Conference Call Transcript

This week, Lowe’s stock traded close to the record highs seen a few months ago. The shares gained 29% in the past twelve months and 19% since the beginning of 2019.

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