Q1 Preview: Warm Weather Has Lowe's (LOW) Sweating Following Rival's Results

May 18, 2012 3:27 PM EDT Send to a Friend
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Price: $66.90 +0.42%

Rating Summary:
    8 Buy, 14 Hold, 0 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 14 | Down: 28 | New: 51
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Lowe's Co.'s (NYSE: LOW) shares are trading in positive territory Friday afternoon heading into its first-quarter 2012 earnings report, expected out before the market opens Monday.

Analysts are expecting EPS of 42 cents on revenue of $12.99 billion. The earnings number would be up 45 percent from the last quarter and 24 percent from 34 cents per share reported in the same period last year.

Shares of Lowe's rose 17.8 percent in the quarter to $31.47 at the end of April. For the same period last year, Lowe's rose just 6.3 percent. The stock is down 9.3 percent heading into results.

Investors will likely be looking at Home Depot (NYSE: HD) numbers heading into results. Despite the warmer conditions earlier in the season, planning for a longer chill left Home Depot investors in the cold with in-line EPS and lighter than expected revenue. Even boosted guidance for 2012 missed views.

Data from Bloomberg has 16 analysts at Buy, 11 at Hold, and one with a Sell. The Street's price target average is $33, ranging from $25 to $41.

Analyst Comments
  • Goldman Sachs is looking for sales of $12.94 billion, comps up 3 percent, and EPS of 42 cents. Goldman recently lowered comps numbers on Home Depot's results. The number was previously at 4.5 percent of growth.

  • JPMorgan sees EPS of 38 cents per share with comps up 4.5 percent. The firm commented, "Our larger concern continues to be the lack of big-ticket purchases (cabinets/countertops, and appliances) and we do not expect to see a big inflection until a labor market improvement leads to improved housing dynamics. YOY nonfarm payroll growth peaked in Feb at 1.6% and has receded to 1.4% in April."

  • Deutsche Bank is looking for EPS of 45 cents an total sales of $13.25 billion. The firm is asking a baker's dozen worth of questions, some of the more notable ones related to how Lowe's plans to perform in the macro environment, the weather impact versus underlying demand improvements, ticket versus traffic, overall market share, and appliances. Look for questions like these to be answered in the release or conference call.
Stay tuned to StreetInsider.com's EPS Insider section to see our analysis of the highly-anticipated quarterly results within seconds of their release. You can also check out Lowe's past performance at Streetinsider's Lowe's Income Statement.


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