Lowe's Cos. (LOW) Tops Q3 EPS by 6c, Revenues Miss; Offers FY19 EPS Guidance

Lowe's Cos. (NYSE: LOW) reported Q3 EPS of $1.41, $0.06 better than the analyst estimate of $1.35. Revenue for the quarter came in at $17.4 billion versus the consensus estimate of $17.69 billion.

Sales for the third quarter were $17.4 billion and consolidated comparable sales increased 2.2 percent. Comparable sales for the U.S. home improvement business increased 3.0 percent. Analysts had expected a 3.1 percent rise.

"We were pleased with the performance of our U.S. home improvement stores, which reflects a solid macroeconomic backdrop and continued progress in our transformation driven by investments in customer experience, improved merchandise category performance, and continued growth of our Pro business. 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," commented Marvin R. Ellison, Lowe's president and CEO.

"Although we still have work to do, I am confident we are on the right path to build a better Lowe's and generate long-term profitable growth. We are committed to the Canadian market and are taking decisive action to improve the performance and profitability of our Canadian operations. We also have a detailed roadmap and a very experienced team in place to repair our Lowes.com business. 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. We are excited about the progress we've made and the opportunity that lies ahead. I would like to thank our associates for their commitment and dedication to serving our customers and communities," added Ellison.

GUIDANCE:

Lowe's Cos. sees FY2019 EPS of $5.63-$5.70, versus the consensus of $5.67.

Fiscal Year 2019 (comparisons to fiscal year 2018)

• Total sales are expected to increase approximately 2 percent.
• Comparable sales are expected to increase approximately 3 percent.
• Operating income as a percentage of sales (operating margin) is expected to increase 290 to 320 basis points.
• Adjusted operating income as a percentage of sales (adjusted operating margin1) is expected to increase 40 to 60 basis points.
• The effective income tax rate and adjusted effective income tax rate are expected to be approximately 24%.
• The target leverage ratio is 2.75x, therefore the company expects to repurchase approximately $4 billion of stock.
• Diluted earnings per share of $5.35 to $5.47 are expected for the fiscal year ending Jan. 31, 2020.
• Adjusted diluted earnings per share1 of $5.63 to $5.70 are expected for the fiscal year ending Jan. 31, 2020.

For earnings history and earnings-related data on Lowe's Cos. (LOW) click here.

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